Four Things You Need To Know About The Child Tax Credit Payments

Four Things You Need To Know About The Child Tax Credit Payments

The expanded credit was approved as part of President Joe Biden’s $1.9 trillion stimulus package in March, a measure that aims to reduce child poverty and provide struggling families with an additional financial ledge to combat the turmoil from the pandemic.

 

More than thirty-five million American families are expected to receive the first payment of the enhanced child tax credit, the Internal Revenue Service and Treasury Department reported Wednesday night.

The expanded credit was approved as part of President Joe Biden’s $1.9 trillion stimulus package in March, a measure that aims to reduce child poverty and provide struggling families with an additional financial ledge to combat the turmoil from the pandemic.

 

The extra cash, however, has been seen as a disincentive for parents to return back to work, as the nation grapples with a widespread labor shortage.

Here are four things to know about the child tax credit.

Who Qualifies?

The full enhanced credit will be sent to individuals earning $75,000 or less, joint filers making $150,000 or less and heads of households earning $112,500 or less. The amount will then drop by $50 for each $1,000 in income above these thresholds.

Millions of low-income families also qualify for the credit since the relief package made it fully refundable. In the past, the credit was only partially refundable, making many low-income families unable to receive the money.

How Much Money Will The Payments Be?

That depends on household income and the number of dependents.

Biden’s rescue package spiked the credit from $2,000 to $3,000 for each child between the ages of six to seventeen and allowed eligible families to receive as much as $3,600 for each child under the age of six.

If families have dependents that are eighteen years old, they can qualify for $500 each. Dependents between the ages of nineteen and twenty-four and are full-time college students also qualify for the $500 boost.

When Should Parents Expect To See The Money?

The IRS will send the enhanced credit on a monthly basis from July through December largely by direct deposit, while the rest of the credit can be claimed when parents file taxes next year.

Parents with children under the age of six will get $300 monthly payments per child starting July 15, and those with children between the ages of six and seventeen will receive $250 payments per child.

The rest of the payments will be disbursed by the agency on  August 13, September 15, October 15, November 15 and December 15.

Parents can choose to opt out of the monthly payments and receive the credit as a lump sum.

What Do Parents Have To Do To Get The Credit?

The IRS estimated that roughly thirty-nine million households, accounting for eighty-eight percent of children, will receive the credit automatically because they have already filed 2019 or 2020 returns claiming the credit.

The agency will also be sending the credit to low-income families who used the non-filers portal to register for the coronavirus stimulus payments earlier this year.

But parents who didn’t file taxes in 2019 or 2020 or used the non-filers tool must use another IRS portal to receive the expanded child tax credit. The portal asks users for their name, mailing address, email address, date of birth, Social Security numbers, bank account information and identity protection personal identification number that the agency sent earlier this year.

Rachel Bucchino is a reporter at the National Interest. Her work has appeared in The Washington Post, U.S. News & World Report and The Hill.

Image: Reuters