CLEVELAND (WJW) — Families can expect extra cash in their bank accounts starting this week as advance Child Tax Credit payments start going out.
The stimulus bill that passed Congress in March expanded the Child Tax Credit. According to the U.S. Treasury Department, 39 million households, covering nearly 90 percent of children, will receive automatic monthly payments starting Thursday without needing to take any action.
Eligible families will receive monthly payments totaling half of the credit through December.
Qualifying families with children under age six will receive $300 per child each month. Families with children who are six to 17 years-old will receive $250 monthly. The remaining half of the credit will come with tax refunds, bringing the total to $3,600 per child for families with children under six and $3,000 for families with older children. It’s an increase from the previous credit of $2,000 per child.
The payments will be made automatically to families based on last year’s tax return and will be sent via direct deposit or mail, depending on how tax refunds were received.
Randy Carver, President and Founder of Carver Financial Services in Mentor, said the changes could make a significant difference for families struggling to afford childcare.
“From a macroeconomic view, I think this can actually help the economy,” Carver said. “It will allow people to go back to work that many not otherwise. The other side is, people who can use the money, it will put it in their hands immediately rather than waiting a year.”
Even those with no income or who didn’t file taxes can qualify but need to submit information through an online IRS portal.
“Keep in mind this is temporary,” Carver said. “It’s only going to be for this year, so people should be careful about relying on it unless it’s extended, which Congress is trying to do.”
The Biden Administration has proposed extending the expanded tax credit for five years. Some Republicans have argued work requirements should be added for anyone receiving the payments.
There are income limits for a full credit, but even couples filing jointly with an adjusted gross income below $440,000 are eligible to receive at least a partial credit.
Experts advise that some people may want to opt out of the payments to receive the full credit when they file taxes or if their family or financial situation has changed, so they don’t have to repay the money.
More information about the Child Tax Credit is available from the IRS by clicking here.