$3,000/$3,600 child tax credit: possible dates and deadlines

President Joe Biden’s new covid-19 stimulus bill proposal includes provision to dramatically increase the amount offered to low-income families through the use of child tax credits. The year-long expansion of child tax credits is included in Biden’s flagship economic policy, known as the American Rescue Plan, which is expected to cost around $1.9 trillion.

"All told, the American Rescue Plan would lift 12 million Americans out of poverty and cut child poverty in half. That's 5 million children lifted out of poverty," Biden said last week, while announcing the signing of new executive orders to boost the food stamp programme and strengthen protections for federal workers.

When will the new child tax credit allowance be introduced?

This expansion to the child tax credit system is just one part of the mammoth coronavirus stimulus bill that Biden hopes will kick-start the economy and provide some much-needed support for those struggling during the pandemic. Given the $1.9 trillion price tag it may be difficult for the Democrats to get it through the Senate, where they hold the narrowest of majorities, without some alterations.

Congressional Democrats are still yet to even table Biden’s proposal, and they will probably wait until after the President’s cabinet picks have been confirmed and maybe even until former President Donald Trump’s impeachment trial has been concluded. With that in mind we may not see the package on the floor until the second half of February.

There is however some good news with the expected structure of payments for this new-look child tax credit. In the past the money has been distributed as a tax rebate at the end of the year, meaning that recipients have to wait 12 months to get their full allowance.

But this time around reports suggest that the economic support will be distributed in the form of direct payments, much like the stimulus checks, on a monthly basis. Given how promptly the IRS were able to send out the second round of stimulus payments they may be able to begin making payments for the new child tax credit as early as the month directly after the bill is signed.

What is the deadline for eligibility for child tax credits?

If the proposal were to be passed without any amendments it would see an additional 27 million children become eligible for support and a maximum of $3,600 would be available per child. However access to that top amount depends on the child’s date of birth, with a sharp deadline for eligibility.

The IRS state that children must be under the age of 17 by 31 December of the previous tax year to be eligible for the support. That means that only children born after 2003 (in 2004 or later) will be able to receive child tax credits this year.

In the new proposal children aged under 6 on 31 December 2020 will be eligible for monthly payments of $300-per child, while that amount falls to $250-per-child for child dependents aged 6 or above.

For full details on eligibility for child tax credits, check out the IRS’ complete guide.