On Friday, July 15, the first payments for the newly expanded child tax credit will go out to some 39 million families with about 65 million children. This is the first time the federal government has tried to reduce child poverty through widely available direct payments, and could be the greatest blow struck against poverty in decades.
“For some families, the money could be transformative,” writes Moriah Ballingit of The Washington Post. The colossal and historic investment is expected to cut child poverty in half, according to an analysis from Columbia University’s Center on Poverty and Social Policy.”
Though the initiative has been much in the news since its approval in March, many Americans are still confused about it. A recent Ally Bank survey found that nearly half surveyed weren’t sure if they qualified, and a quarter weren’t sure how to access the credit, Carmen Reinicke of CNBC reports.
So, here’s some basic info about the plan, per Kiplinger and CNBC:
- Payments will be issued on or near the 15th of the month through December. Payments won’t continue in 2022 as of now, but President Biden and many Congressional Democrats want to approve the extension.
- For most people, the combined total of the six monthly payments will equal 50 percent of the child tax credit they’re expected to qualify for on their 2021 tax return. They can claim the other half when they file their 2021 tax return.
- For 2021 only, the credit is increased from $2,000 for each child age 16 or under to $3,600 per child for kids 6-17 years old.
- The maximum monthly payment is $300 for each child under age 6 and $250 for children ages 6-17.
- The full credit is available to married parents who file taxes jointly and have adjusted gross income less than $150,000, or $75,000 for individuals. The credit phases out for taxpayers who make more money and ceases for individuals earning $95,000 and married couples earning $170,000 filing jointly.
- The monthly child tax credit payments won’t include the $500 credit available for older children, elderly parents, and other dependents.
- The IRS will deposit the money directly into your bank account, if you receive your tax returns that way, or will mail you a check or debit card.
- Click here to check whether you’re set up to receive the payment by electronic deposit.
- Click here to calculate how much you’ll receive.
Democratic Sen. Michael Bennet of Colorado, a former superintendent of Denver schools, “cited a 2011 study by the National Bureau of Economic Research that found that increasing tax credits could boost test scores,” the Post reports. Economists Raj Chetty and John N. Friedman, then of Harvard University, and Jonah Rockoff of Columbia estimated that the boost in academic achievement could reap gains over a child’s lifetime, increasing the likelihood they would graduate and attend college, and boosting their earnings,” Ballingit reports.