Topline
The U.S. Treasury and the Internal Revenue Service announced Thursday morning families of nearly 60 million children have received $15 billion dollars in the first monthly payments under the recently expanded Child Tax Credit—one of the major antipoverty initiatives in President Joe Biden’s American Rescue Plan passed in March—and here’s what to know if you have, or haven’t, gotten the relief.
Key Facts
About 86% of families who received payments Thursday did so via direct deposit, while the rest should get a check in the mail.
Biden’s American Rescue Plan expanded the Child Tax Credit from $2,000 per child last year to $3,600 for each child under the age of 6 in 2021 and to $3,000 from $2,000 for children ages 6 to 17.
Though families typically wait until tax-filing season to claim the credit, the IRS says it’s sending out half the 2021 Child Tax Credit this year in monthly payments to get money to families sooner during the ongoing pandemic.
Families should continue to receive payments by the 15th of each month for the remainder of the year and are eligible to claim the remainder of the credit on the 2021 tax returns they file next spring.
Individuals earning up to $75,000 a year, heads of household up to $112,500 a year, and joint filers up to $150,000 a year are eligible to receive the full amount of the credit.
The IRS is using information from 2019 or 2020 tax returns or the agency’s online Non-Filers tool to determine eligibility; eligible families that didn’t file taxes or enroll already can receive increased monthly payments to catch up for previous months once they sign up.
Crucial Quote
“For the first time in our nation’s history, American working families are receiving monthly tax relief payments to help pay for essentials like doctor’s visits, school supplies and groceries,” Treasury Secretary Janet Yellen said in a Thursday statement, calling the middle-class tax relief a “major step” in reducing child poverty.
Big Number
$4,380. That’s the average benefit more than 90% of families with children will receive under the expanded credit, according to the Tax Policy Center.
Tangent
The IRS has a tool on its website for families to check their eligibility. Taxpayers who didn’t receive a direct deposit on Thursday should wait to see if they get a check by mail. Anyone who doesn’t should check their eligibility on the portal.
Chief Critic
Experts have cautioned families to be careful about opting for the credit if they’re unsure about their eligibility, particularly because the IRS is using prior years’ income to send out payments despite ultimately using this year’s income to determine eligibility. “Take the money if it’s coming to you, but be very, very aware that this is not stimulus money, and you will have to pay this back if you aren’t entitled to it when it comes time to file,” said Adam Markowitz, a tax professional and certified public accountant in Florida.
Further Reading
Still Confused About Advanced Child Tax Credit? Here’s Some Last-Minute Advice (Forbes)
IRS Releases Child Tax Credit Payment Dates—Here’s When Families Can Expect Relief (Forbes)