Treasury starts monthly child tax credit payments
The Treasury Department and IRS on Thursday started to send out the first batch of monthly child tax credit payments to millions of families, implementing a key part of President Biden’s coronavirus relief law.
Treasury paid about 35 million families that include almost 60 million children. The payments totaled about $15 billion, the department said.
About 86 percent of the payments were made by direct deposit, and other families will get their payments by paper check, Treasury said.
“For the first time in our nation’s history, American working families are receiving monthly tax relief payments to help pay for essentials like doctor’s visits, school supplies, and groceries,” Treasury Secretary Janet Yellen said in a news release. “This major middle-class tax relief and step in reducing child poverty is a remarkable economic victory for America – and also a moral one.”
The $1.9 trillion coronavirus relief law that Biden enacted in March includes an expansion of the child tax credit for 2021. It increased the credit amount and made the credit fully available to the lowest-income families. It also directed the IRS to create a program to make periodic advance payments of the credit, so that families receive funds in installments rather than a lump sum when they file their tax returns.
The IRS is planning to make payments that will generally be made on the 15th of each month through the end of the year. Eligible families will receive monthly payments of up to $300 for children under 6 years old and $250 for children 6-17.
The monthly payments will amount to half of the 2021 credit amount that families are eligible for, and they will receive the other half of the credit when they file their tax returns next year.
Families will automatically receive the monthly child tax credit payments if they filed a 2019 or 2020 tax return or used the IRS’s nonfiler tool for stimulus payments last year. The IRS has set up a web tool for nonfilers who are not currently in line for automatic payments to register for the monthly payments.
The IRS has also set up a web tool for families to opt out of the monthly payments and update their banking information. About 1 million taxpayers have already opted out, senior administration officials said.
The start of the monthly payments comes as the White House and congressional Democrats are pushing to extend the expansion of the child tax credit beyond 2021.
The budget agreement reached by key Senate Democrats this week would pave the way for an extension, though the exact length of the expansion has yet to be determined. Many Democrats want to make the expanded credit permanent, though the price tag is a substantial obstacle.
“The advanceable, expanded version of the Child Tax Credit will quickly get money into the pockets of parents who are still struggling as a result of the pandemic,” House Ways and Means Committee Chairman Richard Neal (D-Mass.) said in a statement Thursday. “I will continue to work to permanently extend the expanded CTC to ensure long-term, sustainable support for America’s families.”