When will child tax credit be sent?
One of the key planks of the President Joe Biden’s American Rescue Plan is the provision of child tax credits, with payments coming this year.
Many families in the United States are awaiting their child tax credit, one of the most significant components of the American Rescue Plan passed by Congress in March. Payments for this new tax credit should begin to reach eligible families in July 2021. Under the new law, individuals making $75,000 or less or families with a combined earned income of $150,0000 or less will be eligible for payments of up to $3000 for children over the age of six and $3,600 for those six or younger.
On Capitol Hill Tuesday, IRS Commissionaire, Charles Rettig, provided an update on the preparations being undertaken to ensure that IRS can make these payments. Commissionaire Rettig assured the Senate Finance Committee that he would communicate with them if any delays in meeting the July deadline arose.
How will the child tax credit payments be made?
The details on how exactly payments will be made directly to families are still be determined. Before the American Rescue Plan was passed, child tax credits were distributed after individuals or families filed their annual taxes. But, because the legislation mandates that the credits be distributed monthly, the IRS must build a system that is able to perform the function.
In his testimony this month, Commissionaire Rettig stated that the IRS expects that to have the system launched by July and that as soon as it is up and running the agency will begin sending families their payments.
The payments will be disbursed between July and December 2021. Each month, families can expect to receive around $250 for children over six and $300 for those younger. Families will be able to claim the remaining credit when they file their taxes for 2021.
Why are families so eager to receive these funds?
The more robust child tax credit aims to support families in the United States who have been hit hard by the covid-19 pandemic. A study released by Mackenzie showed that that stress of balancing work and family responsibilities had caused nearly a quarter of women working in the United States to consider leaving the workforce.
Additionally, during a speech in March, Vice President Kamala Harris stated that the country should consider the exodus of nearly 2.5 million women from the workforce a “national emergency.” The enhanced child tax credit was designed to act as a lifeline to many women and families struggling to meet the demands of their job and their responsibilities at home and as the program is rolled out it will be important to see how it impacts working parents and their retention within the workforce.