Parents could receive $3,600 child tax credit soon - here's what you need to know

President Biden on Thursday signed into law the sweeping coronavirus relief package, a $1.9 trillion measure intended to shore up the nation's economy through another round of stimulus checks, sweetened jobless aid and a generous one-year expansion of the child tax credit.

Most American parents can expect to receive $3,000 a year for every child ages 6 to 17 and $3,600 a year for every child under age 6. The expanded amounts would taper off once income hits $75,000 for individuals and $150,000 for married couples. (Families are normally entitled to up to $2,000 annually in refundable tax credits per child).

If families earn too much to qualify for the expanded tax credits, they can still receive the $2,000 credit for their children if their income level is below $200,000 or individuals and $400,000 for married couples.

SOME FAMILIES COULD RECEIVE UP TO $14,000 FROM BIDEN'S RELIEF BILL

The overhaul of the 24-year-old child tax credit could have significant implications for millions of families, particularly low-income households: More than 4 million children could be lifted out of poverty, according to one analysis conducted by the Center on Budget and Policy Priorities at Columbia University.

Families could also opt to receive monthly payments – roughly $250 to $300 – instead of an annual lump sum. Payments would begin going out in July if Congress approves the relief plan, as it's widely expected to do.

If the federal government overpaid individuals, individuals making less than $40,000 ($60,000 for couples filing jointly) would not need to repay the money. That means that even if families owed money in taxes, they would still receive the benefit.

YOUR 2020 TAX RETURN COULD AFFECT THE SIZE OF YOUR STIMULUS CHECK - HERE'S HOW

A one-year expansion of the child tax credit will cost about $109 billion, according to one analysis from the Joint Committee on Taxation, a nonpartisan congressional body. Columbia University researchers estimate that it will generate more than $800 billion in benefits to society through better health for children and their long-term outcomes.

Still, the quirky design of the law sometimes means that the poorest families are bypassed and do not receive any money: Families who owed little or no income taxes were only eligible for up to $1,400 per child, rather than the $2,000 benefit provided to wealthier families, according to the Brookings Institute. In fact, about 40% of the tax credit went to families earning more than $100,000, while just 15% went to low-income households earning less than $30,000, Brookings found.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Biden has indicated that he supports a permanent expansion of the credit as part of his “Build Back Better” plan, a wide-ranging infrastructure and jobs measure that's expected to follow the stimulus bill. Proponents of expanding the credit say it would cut child poverty in half.

It's unclear whether such a provision would pass; the relief bill passed Congress without a single Republican vote.