Why weren’t the funds from the $3000/$3600 child tax credit sent with the stimulus check payments?

The IRS has sent out 164 million stimulus payments totaling more than 386 billion dollars. The tax authority has also stated that payments for the enhanced child tax credit (CTC) will begin in July.

Why weren't the payments sent together?

The digital payment infrastructure needed to send these payments differ in many ways. The stimulus check sent by the IRS in March/April was the third the tax authority distributed to millions in the US. There is only one major variable the IRS is looking for when sending these payments -- the recipient’s income. If it is under the eligibility threshold, they are mailed a check. 

The enhancements made to the child tax credit under the American Rescue Plan, completely change the way these payments are distributed. Before the passage of the stimulus bill, the child tax credit was claimed during tax season and the funds were distributed with one’s tax return. Now, the payments for the credit will be made on a monthly basis. In order to be able to determine and send these payments, an online portal had to be built and the IRS needed time to staff up the department.

In April, IRS Commissionaire, Charles Rettig testified before the Senate Finance Committee and stated that his agency was on track to begin sending payments associated with the child tax credit in July.

How will payments for the Child Tax Credit be made?

Beginning in July, qualifying families will receive $300 per child for children under six and $250 per child over six that they claim as dependents. The American Rescue Plan also extended the age limit to seventeen.

There are no limit on the number of children eligible to be counted as long as a family’s income falls under the established cap of $75,000 for a single filer or a joint income of up to $150,000 for married couples.

For example, a qualifying family with three children, one older than six and two younger would be eligible to receive $850 a month between July and December. To receive the remaining credit, families will make a claim when filing their federal income taxes in 2022.

Tax Filing in 2020

The federal government and many states have moved back their tax filing deadlines to 17 May. At the federal level, this decision was in part, made to give people more time to file their taxes. This year, many who do not normally submit a tax return are encouraged to do so to claim benefits such as the child tax credit.