$3000/$3600 Child Tax Credit: how and when will the payments be sent?

Payments for the enhanced Child Tax Credit (CTC) are slated to begin 15 July, according to the Internal Revenue Service. Families can expect payments on the 15th of each month through December unless it happens to fall on a weekend or holiday. The remaining balance of the tax credit can be claimed next year during tax filing season.

Some families are deciding if they would rather postpone the payments in order to claim the full value of the credit as a bulk sum next year when they file their taxes. Those interested in this option will be able to alert the IRS to this in early June through the portal being developed to support the distribution of these payments.

Who can claim the Child Tax Credit?

Eighty-eight percent of children will benefit from the new CTC, which experts believe could have positive impacts on rates of child poverty. The expansion will extend the credit to over twenty-four million children, the majority of which are Black and brown.

All together, the American Rescue Plan, of which the changes to the CTC were included, is expected to lift more than 5 million children out of poverty this year. In addition, the Center on Budget and Policy Priorities (CBPP)  found that the expansion will also lift nearly ten million children above or closer to the poverty line, of which “2.3 million are Black, 4.1 million are Latino, and 441,000 are Asian American."

These increases are due to the changes made regarding income. Before, there were income minimums to claim the Child Tax Credit, leaving out some of the most economically vulnerable children in the US. The CBPP found that single parents making under $10,000 a year with one child under six, would have received around $1,125 under the old tax code, with the updates, she will see a credit worth $3,600. The new requirements place caps on the total income families and individuals can make to claim the credit:

Individuals making more than $95,000 a year and married couples filing jointly with a combined income of over $170,000 will gradually be phased out of claiming the entire value of the credit.

Representative Katie Porter of California has raised concerns that this structure, while an improvement on the old version, may penalize single parents. In a video posted on twitter, Rep. Porter highlights what she calls the “Single Parent Penalty,” and describes how children in single-parent households could receive less in benefits. If a parent or guardian files as “single” or “Head of Household” and are even a little bit over the income limit, their benefits will be cut. Rep. Porter argues that this makes a “child living in a single parent family, [...] less likely to get the tax credit.” The Congresswoman, who is a single parent herself, has put forth legislation to avoid this penalty for single family households.