$3,000/$3,600 Child Tax Credit: are the payments weekly or monthly?
The American Rescue Plan could halve childhood poverty in the US, but the IRS warn that stimulus check distribution and tax season 2021 could hamper the roll-out of vital programmes.
The American Rescue Plan included a ground-breaking change to the Child Tax Credit programme, which was intended to reverse the worrying trend of increased childhood poverty since the pandemic began.
The new provision would see eligible parents and guardians sent up to $3,600 per year, with the support coming in the form of monthly direct deposits.
However there are now fears that the overworked IRS may be unable to implement the new proposal for months as they battle through a backlog of tax returns and stimulus check payments.
IRS chief warns of delays to the new Child Tax Credit programme
Last week the IRS announced that they were extending the federal income tax return deadline to 17 May, giving filers an extra month to get their returns in after a year that saw many more programmes and requirements added to the process.
However the extension was also hoped to provide extra time for the IRS to complete distribution of the third round of stimulus checks. But with that delay it seems that Child Tax Credit recipients may have to wait longer for the new system to be introduced.
IRS Commissioner Charles Rettig told the House Ways and Means Committee on Thursday that this will likely affect the introduction of the monthly payments:
“I don’t have the resources to devote to that portal until the filing season ends,” said Rettig. “It might be a challenge to get it monthly right out of the box.”
Rettig did point out that the final bill passed by Congress states that the payments will be changed to periodic, instead of specifically calling for monthly payments, which gives them some flexibility for the early stages.
“We’re focused on trying to get these payments out to the people in a meaningful manner and a meaningful timeframe,” said Rettig.
New Child Tax Credits could help halve childhood poverty
Research carried out by the Brooking Institute, one in seven children in the United States are currently living in poverty. Tackling this issue was one of the central aims of the financial support offered in Biden’s new stimulus bill, and the Child Tax Credit expansion should do just that.
Researchers at Columbia University’s Center on Poverty and Social Policy found that the new-look programme is projected to reduce child poverty from around 14% to 7.5%, with the largest effect felt by those living in what is termed ‘deep poverty’.
Aside from changes to the distribution terms, the removal of the earning floor (which had previously prevented the poorest families from receiving the full entitlement) and the significant increase of the amount on offer make this a generation change in state support for families and children.