CLEVELAND (WJW) — President Joe Biden’s $1.9 trillion relief package signed into law last month greatly increases tax credits available to taxpayers for their children and includes a program that will include monthly payments to qualifying families. However, many Americans may not be aware of those changes and how to take advantage of the assistance.
What has changed with the child tax credit?
Under previous law, most taxpayers could receive tax credits of up to $2,000 per child.
The new virus relief bill increases that tax break for 2021 to $3,000 for every child between the ages of 6 and 17 and to $3,600 for every child under the age of 6.
The expansion of the 2021 child tax credit, along with other measures in the rescue act, such as impact payments of up to $1,400 for eligible family members, will cut childhood poverty in half this year, according to an analysis by the Center on Poverty and Social Policy at Columbia University.
Several lawmakers are leading an effort to make the new child tax credits permanent.
When will monthly payments begin?
According to an IRS fact sheet, individuals eligible for a 2021 child tax credit will receive advanced payments of the credit through periodic payments from July 1 to Dec. 31, 2021.
In a press release dated March 25, lawmakers said qualifying families will receive $250 to $300 per month per child.
The credits are fully refundable.
According to Kiplinger, 50% of the child tax credit will be paid in advance with periodic payments. While most experts expect the payments to be made monthly, it’s possible the payment schedule could vary.
Who is eligible for the additional tax credit?
Most parents can expect to get the credits. Fox Business reports the expanded amounts, however, begin to decrease for individuals with incomes of $75,000 and for married couples with incomes of $150,000.
If a family doesn’t qualify for the expanded child tax credit, they can still receive the $2,000 credit if the income level is below $200,000 for individuals and $400,000 for married couples.
A married couple has an 8-year-old, a 3-year-old and a gross income of $100,000 will receive an estimated monthly payment of $550 ($300 for the 3-year-old and $250 for the 8-year-old) and will qualify for an estimated $3,300 child tax credit to claim on their 2021 tax return (to be filed in 2022).
How do parents get the payments?
The IRS will establish an online portal for taxpayers to update their relevant tax data to obtain the expanded child tax credits, such as notifying the government of the birth of a child in 2021. These updates will allow the IRS to make mid-year payment adjustments.
“In addition to this online tool, the Treasury Department and IRS will carry out a sweeping public awareness campaign … to reach all Americans who may be eligible for this financial assistance,” a Treasury fact sheet said in reference to the expanded child tax credits.