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Six months into the first year of the Biden administration, Democrats are set to roll out one of their most ambitious initiatives yet. As part of the American Rescue Plan, American families will reap the benefits of an expanded child tax credit program. Through the end of 2021, American households will receive monthly checks of up to $300 for each child. The program will reach 35 million families and assist approximately 88% of children in the country. With the program set to begin in mid-July, there are a few things that every recipient should know about the expanded child tax credit program.
How Did We Get Here?
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The modern federal child tax credit program kicked off in the late 1990s during the later stages of the Clinton administration. At first, families received checks of about $400 per month. However, the program focused on reducing taxes more so and many families did not receive the financial assistance they originally hoped for. Over the last two decades, the child tax credit has primarily remained a partisan issue. Democrats have tried to increase the child tax credit and evolve it into something that could help marginalized communities that live in poverty. Meanwhile, Republican lawmakers pushed back and were opposed to transforming the credit into something that would resemble welfare. Instead, the GOP moved to double the child tax credit to $2,000 per year from 2017 through 2025. However, there was a catch. There are stipulations limiting how much of the credit could go toward increasing a family’s cash refund.
Much like every other aspect of life, the COVID-19 pandemic shifted views toward the child tax credit program. As stimulus checks were being put together, Democrats increased the child tax credit to as much as $3,600 per child and made it fully refundable. In addition, Democrats instructed the IRS to distribute part of the tax credit in advance through December.
What To Expect Now
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Beginning July 15, the child tax credit program will begin to roll out. Families with a combined income of less than $150,000 will receive an annual child tax credit of up to $3,600 for children under the age of six years old. Families with a combined income of less than $150,000 will receive an annual child tax credit of up to $3,000 for children between the ages of six and 17 years old. Rounding out the program, families with a combined income between $150,000 and $400,000 will receive a child tax credit of up to $2,000. Those interested in learning more can check their tax credit status and eligibility here.
Payments will be distributed on the 15th of each month unless the date conflicts with a holiday. Those hoping to receive their tax credit in a lump sum can opt out of monthly payments by using the IRS website.
FAQs
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Who will be eligible for child tax credits?
Households earning less than $400,000 will be eligible for child tax credits of varying amounts.
Will I be eligible if I don't pay taxes?
Households that file taxes will receive payments directly. Families that do not earn enough to pay taxes can receive child tax credits by submitting this form.
When will payments be distributed?
Payments will be distributed each month on the 15th. Those hoping to receive their payments in a lump sum instead of a monthly check can do so through the website.
How long will this last?
This program is set to last through the end of 2021.
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