$3000/$3600 Child Tax Credits: Will I automatically receive the payments?
Payments for the child tax credit will begin 15 July and many families are wondering if they will receive the $250 or $300 credit automatically.
In less than two days, millions of families across the United States will begin to receive the Child Tax Credit payments. Under the American Rescue Plan, changes to the quantity received and distribution method were made to the credit.
Rather than a non-refundable $2,000 credit with a minimum income requirement, the new structure is fully refundable, and families will receive monthly payments. For those eligible to receive the payments who have filed their 2019 or 2020 taxes, payments will be made automatically using the information reported during filing.
For each child under six, those eligible will receive $300 a month, and for children between the ages of six and seventeen, $250 will be sent. These changes mean that if a family has three children, ages two, seven, and nine, they will receive monthly checks worth $800 through December. The remaining balance of the credit will be claimed when families or single parents file their taxes next year.
What portals has the IRS launched to help families manage payments?
To help families manage their payments, the IRS has launched two portals. The first, Child Tax Credit Eligibility Assitant, which helps users determine if they are eligible to receive payments. Originally launched in English, the IRS announced that Spanish language features had been added.
The second is the Child Tax Credit Update Portal, which allows families to make changes or add a bank account to receive the payments through direct deposit. Using this portal, families can also opt out of the payments if they wish to receive the full value of the credit as a bulk sum when they file their taxes next year.
How could the payments of the Child Tax Credit impact personal income?
Compared to those advocating for a fourth stimulus check, many more legislatures are pushing for the changes to the child ta credit to be made permanent. Many arguments are based on how these payments will impact rates of child poverty in the United States. With an estimated 24 million more children, the majority of which are Black and brown, now eligible, experts believe more than half of children currently in poverty could be lifted out through the credit.
After the third check worth $1,400 -- or more for families -- was sent, personal income rose almost twenty-one percent. This increase was more than double what was seen after the $600 checks were sent in December and January.
Since March, personal income has fallen -- rapidly.
In April, the rate fell by thirteen percent, and in May, it dropped further by two percent. In real numbers, this is a drop from its March high of $24.42 billion to $20.8 billion in May. If the trend continues, the number could fall to levels seen last October and November, when the surge in hospitalizations and deaths led to a new wave of shutdowns.
However, the decline in personal income may slow as families receive the payments for the Child Tax Credit. With families able to receive more hundreds of dollars a month, there is sure to be a reflection in personal income data. However, increases month to month will not be as dramatic because the amounts will be smaller than the value of the third stimulus check.