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President-elect Joe Biden is currently being sworn in as the next president of the United States of America.
His team is currently proposing a $1.9 trillion package known as the “American Rescue Plan.”
The proposal contains a lot of different measures that could help boost the economy and help millions of struggling Americans.
One of the most popular items of this package are the new stimulus checks, which are expected to amount to $1,400.
Just those checks alone could amount to over 22% of the income for houses making around $18,000, which is quite a substantial boost.
But the payouts for many low-income Americans could be a lot more when you factor in the potential tax credits.
First, there is the child tax credit.
These tax credits would offer $2,000 for a qualifying child dependent below age 17 and up to $1,400 can be lumped into an individual’s income tax refund.
The credit should be completely refundable and the payout would apparently increase to $3,600 for kids under the age of six and $3,000 for children ages 6 to 17.
Once again, that is a massive benefit, especially for those in the lowest income brackets.
Then there is also the earned income tax credit for 2021.
The payout for this credit would almost triple to close to $1,500 for childless workers and would also bring the credit income limit up to $21,000 which is a $5,000 increase.
When these credits are combined with the new incoming stimulus payments, some lower income families and households will benefit tremendously.
For example, for the bottom 60% of incomes, they would average an award of $3,520. That would equal around 11% of annual income according to the Institute on Taxation and Economic Policy.
For the lowest income households, which would be people averaging around $11,000 a year in income, they could receive a combined $3,650 pay out. That would amount to approximately 1/3 of their annual income.
So as tax season approaches this year, it is going to be vital that you take advantage of all of the tax credits available to you for maximum benefit.
We still don’t know for sure how this new stimulus plan will play out and what features will actually become law but I would keep a close eye on all of these credits if any of them might apply to you.
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Daniel Gillaspia is the Founder of UponArriving.com and creator of the credit card app, WalletFlo. He is a former attorney turned full-time credit card rewards/travel expert and has earned and redeemed millions of miles to travel the globe. Since 2014, his content has been featured in major publications such as National Geographic, Smithsonian Magazine, Forbes, CNBC, US News, and Business Insider. Find his full bio here.