Three months after the American Rescue Plan Act was passed in March 2021, roughly 90 percent of the intended recipients have received their $1400 stimulus check – either in the mail, or through direct deposit, as the IRS recommends. Many have also received various other types of pandemic-related government assistance, including federal unemployment insurance, “plus-up” payments, and the increased and advanced Child Tax Credit, for which small monthly checks will be sent out starting in July.
There is conversation about the need for a fourth stimulus check. Roughly eighty-five Representatives and Senators, all Democrats and most associated with the party’s progressive wing, have come out in support of the proposal. In spite of this, Republicans have fiercely opposed another stimulus proposal, and many centrist Democrats have suggested they are reluctant to pursue one. Perhaps most damning, President Biden has displayed no interest in a fourth stimulus check, preferring instead to focus on his twin COVID-19 recovery bills – the American Families Plan and American Jobs Plan – and shepherd them through the Senate. With fiscally conservative Republicans seeking to trim expenses from each bill, observers contend that Biden simply does not have the latitude to attach a massive fourth stimulus check to either.
With that said, the existing benefits from the American Rescue Plan Act are substantial in themselves – and there is a little-known tax credit that could save you as much as $8000 this year if you qualify.
The payment is not a payment in itself. Instead, it is a tax credit, deducted from money that you owe to the IRS. For this credit, you can write off expenses related to the care of a child or other dependent, up to $8000 for a single child or up to $16,000 for two or more children.
Moreover, the tax credit is refundable. This means that, even if you do not owe the IRS money to begin with, you could gain up to $8000. Similarly, if you owe $4000 to the IRS, the tax credit would eliminate that debt and leave you with $4000.
Most parents will qualify for this credit. The credit slowly phases out as parents make more money; at an income level of $183,000 per year, the credit falls to only 20%. Once parents begin to make more than $400,000 per year jointly, the credit is no longer in effect altogether. Since the overwhelming majority of households in the United States do not make $400,000 per year, though, most parents will receive some of the rebate, even if it is not the full $8000.
You can read more about the credit on the IRS’s website here.
Trevor Filseth is a news reporter and writer for the National Interest.