WASHINGTON (NEXSTAR/AP) The Treasury Department said Monday that 39 million families are set to receive monthly child payments beginning on July 15.
The payments are part of President Joe Biden’s $1.9 trillion coronavirus relief package, which expanded the child tax credit for one year and made it possible to pre-pay the benefits on a monthly basis. Nearly 88% of children are set to receive the benefits without their parents needing to take any additional action.
Qualified families will receive a payment of up to $300 per month for each child under 6 and up to $250 per month for children between the ages of 6 and 17. The child tax credit was previously capped at $2,000 and only paid out to families with income tax obligations after they filed with the IRS.
In testimony at a Senate hearing last month, IRS Commissioner Charles Rettig said it will cost nearly $400 million and require the hiring of 300 to 500 people to get the new monthly payment system and electronic portal in place for the child tax credit. “The IRS will be working hard to deliver this program quickly and efficiently,” he said.
“We have to create a new structure,” Rettig said, adding that the tax-collecting IRS is “not historically” a benefits agency. The IRS, which has suffered budget cuts over the past decade, has been further burdened by the pandemic and the task of sending out hundreds of millions of economic stimulus payments in three rounds.
In embedding the expanded child tax credit in the $1.9 trillion rescue legislation enacted last month, Democrats sought to provide support to families affected by the coronavirus pandemic and parents forced to cut down on work or give up jobs to take care of children after losing access to childcare. Democrats view the tax change as an opportunity to address income inequality worsened by the pandemic. According to some academic estimates, it would reduce the number of children living in poverty in the U.S. by more than half.
It temporarily increases the existing child tax credit from a maximum $2,000 a year per child to $3,000 for each child aged 6 to 17 and $3,600 for children under 6. It offers the option for families to receive advance monthly payments, rather than waiting for a lump sum based on the parents’ tax liability. The change will be in effect for a year under the rescue law; Democratic lawmakers have said they want to make it permanent.
Do you qualify for the child tax credit?
Individuals who make less than $75,000 or married couples who make less than $150,000 and file jointly will be eligible for the full tax credit per qualifying child.
Similar to the stimulus checks, the credit will phase out for people who make more than that, with individuals who earn $95,000 and married, joint-filers who make $170,000 not eligible for the financial boost.
If a family doesn’t qualify for the expanded child tax credit, they can still receive the $2,000 credit if the income level is below $200,000 for individuals and $400,000 for married couples.
The Associated Press contributed to this report.