Can you claim child tax credit with no income?

The American Rescue Plan enacted in March included a number of policies designed to give a leg up to those that struggle to make ends meet. In particular, the enhanced Child Tax Credit for the 2021 fiscal year could cut childhood poverty in half.

This feat will be achieved if the parents of those children are signed up for the newly created advance payment program which started sending cash to families 15 July. Prior to the changes taxpayers had to claim the credit when they filed their taxes and there was an earnings floor that had to be met before a parent could begin to claim the credit. Visit now: child tax credit with no income

What is the Child Tax Credit?
Before the changes were made to the structure of the Child Tax Credit under the American Rescue Plan, it had been adjusted in 2017 as a part of the Tax Cut and Jobs Act (TCJA). This saw the credit expanded to $2,000 per child, but only $1,400 of that was refundable. Furthermore, in order to claim the refundable portion of the credit, a filer had to show earned income of more than $2,500.

Now that the earnings floor has been removed and the credit is fully refundable, it is expected that childhood poverty could be reduced by half in 2021. But the measure will be temporary, with the changes set to expire at the end of the year. President Biden has said that he wants to extend the expansion until 2025, when the changes made in 2017 will expire as well, dropping the credit back to $1,000. The hope is that the enhanced credit will prove so popular that voters will want the changes to be made permanent.

Congressional Democrats, for their part, would like to make the changes to the credit permanent starting this year as part of the American Families Plan but that won’t be possible at this time. An extension is penciled into the $3.5 trillion Democrat-only budget deal taking shape, along with the $1.2 trillion bipartisan infrastructure bill, in the Senate.