Nearly 39 million households will see a bump in their household income come July 15 when the expanded Child Tax Credit begins, the Treasury Department announced on Monday.
Households with children will see monthly payments of as much as $300 per child for children under 6 and up to $250 per child for those older than 6.
The payments will continue monthly through December. Most of the payments will be sent via direct deposit, the Treasury Department said, while some may come as paper checks or as funds on a debit card.
The payments are part of the American Tax Plan Act which was passed in March. Families claiming the credit will receive up to a total of $3,000 per qualifying child between ages 6-17 or $3,600 for each child younger than 6.
The plan gives parents the option to take the money in monthly installments that continue from July to December then take the remaining credit when taxes are filed in 2022, or to take the entire credit on 2022 tax returns.
Previously, the tax credit was up to $2,000 per qualifying child under the age of 17 and was claimed yearly on income tax returns.
The payments will be automatically sent to those eligible. Parents need not do anything to get the payments. However, there will be a portal set up so that those who are eligible and prefer to receive the credit all at once when they file their income taxes will have the opportunity to opt-out of the advance monthly payments plan.
The credit will be sent to individuals making up to $75,000 a year, heads of households making up to $112,500 and those married filing jointly up to $150,000 a year.
According to the Treasury Department, 88% of children in the United States will receive the advance monthly payments. The payments will be based on a taxpayer’s 2020 tax returns. If a person has not filed a 2020 return or if that return has not been processed, 2019 tax returns will be used to determine if a person is eligible for the payment and how much the payment will be.
Democrats hope to make the credit permanent instead of it lasting just one year under the American Rescue Plan Act.
“The pandemic is driving families deeper and deeper into poverty, and it’s devastating,” said Rep. Richard Neal, D-Massachusetts, chairman of the Ways and Means Committee. “This money is going to be the difference in a roof over someone’s head or food on their table. This is how the tax code is supposed to work for those who need it most.”
Prior to the vote on the plan, Republican Sens. Mike Lee of Utah and Marco Rubio of Florida released their own expansion of the credit that ties the benefit to work.
Rubio called Biden’s Child Tax Credit “corrosive” in an op-ed in The National Review prior to the vote on the American Rescue Plan Act.
“If pulling families out of poverty were as simple as handing moms and dads a check, we would have solved poverty a long time ago,” Rubio wrote in an op-ed piece in the National Review.
Sen. Mitt Romney, R-Utah, also proposed a child benefit that saw $350 payments for children ages 0-5, and $250 payments for children ages 6-17.
Cox Media Group