Here's What You Need to Remember: Expansion of the Child Tax Credit is the most significant policy to come out of Washington in generations, and Congress has a historic opportunity to provide a lifeline to the middle class and to cut child poverty in half on a permanent basis.
The White House passed the American Rescue Plan back in March, a bill that boosted the child tax credit for eligible families until the end of the year. The credit will be sent out by the IRS by monthly cash payments from July to December.
President Joe Biden’s expansion of the credit sends parents $3,600 per child under the age of six and $3,000 for each child between the ages of six and seventeen.
Up to half of the payments will be distributed in monthly payments between $250 and $300 per eligible child, with the rest of the credit available when parents file taxes next year.
Biden’s rescue package also made the credit fully refundable for 2021.
Similar to the qualifications for the stimulus payments from Biden’s relief bill, individuals earning up to $75,000 are eligible for the full enhanced credit amount, as well as joint filers making up to $150,000 and heads of households earning up to $112,500. The amount will then drop by $50 for each $1,000 in income above these caps.
Families can expect a letter from the IRS regarding their potential eligibility for the child tax crest, along with a follow-up letter with an estimate of their monthly payment amount, which will first start going out on July 15.
The rest of the payments will be issued on August 13, September 15, October 15, November 15, and December 15.
For families who are eligible for the credit, no action is needed to receive the relief, as long as the IRS has up-to-date information on file.
But for those who haven’t filed a 2019 or 2020 tax return and did not use the “non-filers tool” on the agency’s website last year to formally register for a stimulus payment, it is encouraged to file a return immediately.
The White House has called on Congress to extend the child tax credit through 2025 under the American Families Plan, but several congressional Democrats have pushed for the credit to be permanent.
“Expansion of the Child Tax Credit is the most significant policy to come out of Washington in generations, and Congress has a historic opportunity to provide a lifeline to the middle class and to cut child poverty in half on a permanent basis,” a group of lawmakers wrote in a letter to the president earlier this year. “No recovery will be complete unless our tax code provides a sustained pathway to economic prosperity for working families and children. Permanent expansion of CTC will continue to be our priority.”
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. This article first appeared earlier this year.