According to the White House, $15 billion has been paid out to families with nearly 60 million children. The funds will be sent to the families by check or direct deposit. The amount you receive will depend on your income and the number of children who are eligible.
The IRS is undertaking a massive task. The White House describes the one-year expansion of the IRS as historic relief for the largest number ever of working families.
These are key facts about how it works.
What amount will my family receive?
Families will receive $300 per month for every child below the age of 6 under the expansion. The amount for children aged 6-17 is $3,000 or $250 per month. This is an increase of $2,000 per child compared to previous years, when it was $2,000 per child ages 0-16.
For families with higher incomes, the amount will begin to decrease. It is $150,000 for married couples filing jointly and $112,500 for single parents who are head of household. To find out how much you could get, there are many online calculators that you can use.
Why is this money being sent out now?
This week's payment is called an advance child credit payment. Families that were eligible for the child credit in the past would have received it as a lump sum at tax time. The credit will now be split in half over six months. A payment will be made on or about the 15th of each month, from now to December. The second half of your credit is available when you file your taxes.
How do I get the money?
You should automatically receive the monthly payments if you file federal taxes. You can opt to not file federal taxes and still receive your monthly payments.
Tim Flacke, executive Director of Commonwealth, a social-impact nonprofit, says that it is a smart idea for families to verify the IRS account they have on file. These details include the most current information about your bank account and your mailing address.
Can I cancel the advance payments so that I get the entire credit next spring, when I file my taxes?
Yes. The IRS created , a website that allows you to manage your payments. Before you can stop your monthly payments, you will need to create an account and verify that you are who you say they are.
Opting out does not mean you will turn down credit. It is just delaying the moment you receive it. People who have a history of getting large tax credits in spring may find this a great option. They can use that credit to offset any taxes due or make big purchases.
What happens if my child turns 18 years old in 2021? What happens if my child has a new baby?
The credit is available to anyone who has a baby in 2021. According to the IRS, you can make any changes to your dependents and marital status on its website by the end of summer.
This is the largest one-year drop in child poverty history. But is that true?
Columbia University's Center on Poverty and Social Policy estimates that the American Rescue Plan's expanded child tax credit and other measures could lift 5,000,000 children out of poverty. This is not just because the credit amount is higher, but also because families with very low incomes were not eligible for the entire amount in the past.
According to the Treasury Department, 26 million children from low-income families will now receive the full credit.
Families must register with the IRS in order for this to occur. Many families haven't done so. Indivar Dutta–Gupta, the co-executivedirector of Georgetown Center on Poverty and Inequality, said that children need a Social Security Number to be eligible.
Aisha Nyandoro CEO of Springboard to Opportunities in Jackson, Miss., believes that some families might mistakenly believe signing up for the monthly advance payments will make them ineligible to receive other government programs.
In the next few days, her organization will go door-to-door to verify that families have received the payments. She also hopes word-of-mouth will fill in the gaps.
"Somebody calls their friend or their neighbor and asks, "Have you received your check?" Nyandoro responds.
What happens next year?
The 2021 extension of the child tax credit is not available. The Senate Budget Committee announced Tuesday a budget deal that would extend it. The extension was also offered by President Biden under the American Families Plan, but is being opposed in Congress. The American Rescue Plan was not supported by any Republican, and some criticize the expanded child tax credit.
Senator Marco Rubio, Florida, called it corrosive in an opinion piece published in the National Review. He wrote that there is more to lifting families from poverty than income from the government in February.
Supporters hope that a smooth rollout will convince those who are still skeptical about the benefits of expanded credit.
Nyandoro states, "What I am hopeful of is that the power of these checks means so many Americans is going force the hand of politicians making this permanent."Updated Date: 15 July 2021, 17:15