In February, President Joe Biden claimed that the readjusted Child Tax Credit portion of the COVID relief bill would “cut child poverty in half.”
Five months later, Biden’s plan will be set in motion on Thursday, July 15, with the first round of monthly Child Tax Credit payments being distributed to nearly 39 million families, according to the U.S. Treasury Department.
Hoping to alleviate millions of children from poverty, Biden’s revised Child Tax Credit will provide monthly payments for 88% of children.
The Internal Revenue Service reported that the American Rescue Plan raised the maximum Child Tax Credit to “$3,600 for qualifying children under the age of 6 and to $3,000 per child for qualifying children between ages 6 and 17.”
Starting Thursday qualified households will receive their first round of monthly installments. Families can expect direct deposits or paper checks of up to $300 per child under age 6 and up to $250 per child age 6 through 17.
The monthly payments will only be distributed up to December 2021, however, Biden hopes to continue the Child Tax Credit through 2025 with his $1.8 trillion American Families plan.
Eligible families won’t have to do anything to receive their payment, the IRS will automatically calculate whether or not your household is eligible with your 2019 and 2020 federal income tax returns.
Qualified families will receive a personalized letter listing an estimate of their monthly payments.
The maximum credit is available to taxpayers with a modified adjusted gross income of $75,000 or less for a single taxpayer; $112,500 or less for a head of household; or $150,000 or less for married couples who file a joint tax return, said the IRS.
The IRS introduced a Child Tax Credit Eligibility Assistant tool on their website in June, to help families navigate through the Child Tax Credit process: check to see whether their family qualifies, manage incoming payments and adjust banking information.
Lawmakers say the tax credit will help lift 55,000 Massachusetts children out of poverty; U.S. Rep. Richard Neal recently said the Child Tax Credit would help more than 8,000 children in his district.
Using a child tax credit calculator
Those interested in unenrolling from the Child Tax Credit can do so on the Child Tax Credit Update Portal. This would enable you to be able to claim the full credit on your 2021 tax return with the IRS, rather than receive half of it in payments this year.
Want to see how much your family will potentially earn from the Child Tax Credit? You can use the Kiplinger Child Tax Credit Calculator to determine your monthly credit earnings.
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