Starting this summer, the Internal Revenue Service (IRS) will provide a “child tax credit” in the form of a stimulus payment to families across the nation. Beginning July 15th, families that fall into a specific income bracket will receive a monthly payment for each child. The payments will continue through December, part of President Joe Biden’s $1.9 trillion American Rescue Plan, which was signed into law back in March.
“Here’s the great news: you won’t have to wait until your next year’s tax return to get that break,” Biden said. “I’m announcing today that on July 15th and on the 15th of every month thereafter throughout year, you will get deposited in your bank account, half of your tax cut, at least $250 per child each month, a direct deposit into your account. So if you’re a working family with two kids, you’re going to get $500 a month into your bank account on the 15th of every month starting in July.”
“You won’t have to wait until your next year’s tax return to get [the Child Tax Credit]. I’m announcing today that on July 15th, on the 15th of every month thereafter throughout the year, you will get deposited in your bank… $250 per child each month…
— CAP Action (@CAPAction) May 17, 2021
Part of Biden’s American Rescue Plan also upped the child tax credit for the 2021 tax year, something Biden has talked about extending through 2025, and potentially making permanent, NBC News reported.
“Under the American Rescue Plan, families can receive a credit totaling $3,600 for each child under 6 and $3,000 for each one under age 18 for 2021. This is up from the current credit of up to $2,000 per child under age 17,” CNN reported. “The enhanced portion of the credit will be available for single parents with annual incomes up to $75,000, heads of households earning $112,500 and joint filers making up to $150,000 a year.”
The IRS is developing two online portals for the benefit. The first is for Americans who would qualify for the child tax credit but do not file taxes on a yearly basis because their income is below the poverty line, which the Department of Health and Human Services (HHS) indicates is $26,500 for a family of four. According to H&R Block, the minimum income to file taxes for a single filer under the age of 65 is $14,050. That number increases to $24,800 for married filing separately if both spouses are under the age of 65.
The second portal, according to The Washington Post, is for Americans to alert the IRS about “changes in custodial status,” as well as a change in income, number of children, or filing status. This portal can also be used to opt out of the monthly payment and receive the full benefit next year come tax season.
The Biden administration claims 88% of children in the United States, or roughly 39 million households, will benefit from the child tax credit payments.
House Speaker Nancy Pelosi (D-CA) applauded the move, saying Biden and the House Democrats’ “leadership” will result “in nearly 40 million families with children will soon have critical financial relief that will help sustain them during the pandemic and in the days ahead.” She also said the “lifeline” should be made “permanent.”
If the enhanced benefit becomes permanent, independent analysts estimate it would cost Americans roughly $100 billion per year, The Chicago Tribune reported.