$3000/$3600 child tax credit per child: when will it arrive?
President Biden’s $1.9 trillion relief bill will increase Child Tax Credits to a $300 monthly payment, but when will the IRS be able to distribute the much-needed support?
President Joe Biden’s $1.9 trillion American Rescue Plan includes sweeping changes to the Child Tax Credit (CTC) which significantly boost the amount of support on offer.
The new system provides a year of payments totalling $3,000 for children aged from 6-17 and $3,600 per year for children who are under the age of six. The bill effectively doubles the size of the existing CTC, providing an extra $125 billion.
For the first time low-income families will be eligible for the full credit after the non-refundable element was removed, which had disqualified low earners from receiving the full amount. Experts believe that this CTC expansion will dramatically reduce child poverty by boosting the disposable incomes of the lowest-income families by 37.4%.
Who qualifies for the Child Tax Credit?
Under the new legislation, individuals will qualify for the CTC if their annual earnings are below $75,000; or a joint income of up to $150,000 for married couples. If your earnings are above those limits, you will receive a reduced credit which gradually phases out.
“Even more important than those [stimulus] checks is the child tax credit,” says @ChristineRomans. Here’s what you need to know:— New Day (@NewDay) March 19, 2021
-$3,600 per child under 6
-$3,000 per child under 18
-Tax credits fully refundable
-Monthly paymentshttps://t.co/rkCyP78XoK pic.twitter.com/8zzVcQwGR3
The other change is that it makes CTC fully refundable by removing a rule limiting the refundable portion to $1,400 for household who pay little or no income tax (the current rules limit the refundable portion of the credit to a percentage of earned income in excess of $2,500).
These changes put more money in families’ pockets and also extend the credit to children who are left behind by the current credit. According to a report by the Institute on Taxation and Economic Policy (ITEP), approximately 83 million children live in households that would benefit from the new CTC legislation.
When will the new Child Tax Credit payments be sent?
The Biden administration want the expanded CTC to be sent out in monthly payments of up to $300 per child, rather than as a lump sum as was previously the case. This would make the support closer to the recurring stimulus checks that many progressive lawmakers have called for in the past.
It is thought that these payments will begin from July and continue for at least 12 months, although that does present a new logistical challenge for the IRS who are also tasked with processing tax filings and distributing stimulus payments.
In theory, families could receive almost half of their total CTC by the end of 2021 and then claim the remaining amount on their 2021 tax returns. Child Tax Credit can be claimed by filling in Schedule 8812 (Form 1040), provided each qualifying child has a social security number (SSN).
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