According to the Internal Revenue Service (IRS) and the US Treasury Department, starting on July 15, an estimated 39 million US families are qualified for monthly deposits of up to $300 through the newly expanded child tax credit. The advance child tax credit program is part of President Joe Biden's $1.9 trillion economic aid package named the American Rescue Plan passed in March.
Child Tax Credit Payments 2021
According to administration officials, the payments are expected to reduce child poverty significantly. The payments are typically given out yearly as tax refunds.
The IRS stated the credit would be disseminated to about 65 million children or 88 percent of children in the United States. In 2021, the maximum enhanced child tax credit stands at $3,600 for children younger than six years old and $3,000 for children from six to 17 years old, reported CNBC.
Tens of millions of households will receive up to $250 a month per head for ages 6 to 17 and up to $300 per head for six years old based on their ages at the end of 2021. According to the Treasury Department, the payments will be disseminated on the 15th of every month, unless the said date falls on a holiday or weekend. The program will expire at the end of December, unless Congress makes an extension, reported The Wall Street Journal.
The American Rescue Plan was passed in March 2021 to provide relief for Americans during the COVID-19 pandemic. The Biden administration stated the legislation is expected to lift over five million children out of poverty this 2021, diminishing child poverty by over one-half, reported CBS News.
Most qualified families will receive the payments via direct deposit, according to senior administration officials. Families that do not have direct deposit will receive the child tax credit either as a debit card or a paper check.
Since the monthly payment duration will cover merely half the 2021 credit, taxpayers could claim the remaining amount on their 2021 tax return when they file next year. According to Biden, the tax cut sends a clear and strong message to American working families with children that help is here.
The IRS declared it would roll out a taxpayers' portal for the payments. However, the IRS recently announced that the monthly child tax credit payments would be transferred automatically, and most taxpayers need not take action.
The American Rescue Plan increases the existing tax benefit between $2,000 and $3,600 for younger kids and $3,000 for older ones for this tax year. Instead of forcing parents to wait until 2022, after filing yearly income taxes, the relief checks will serve as an advance of half of what they are regularly entitled to receive.
An estimated 80 percent of the families that are eligible have a direct deposit already set up. They need not take further steps. The other 20 percent will receive payments by debit card or check.
The credit is per child in every household. For example, this means a family with three children who are four, eight, and 12 years old can receive up to $800 on a monthly basis.
