Millions of families will receive monthly advance payments starting Thursday as a result of President Joe Biden’s American Rescue Plan.
WASHINGTON – Millions of Americans with children will see more money in their bank accounts starting Thursday.
The Treasury Department and the Internal Revenue Service will begin sending monthly advance payments of $250 or $300 to low- and moderate-income families this week under the newly expanded Child Tax Credit.
The payments will continue on a monthly basis through December, and most eligible families will receive them via direct deposit, senior administration officials said in May. Families that don’t have direct deposit will receive the payment either as a paper check or a debit card.
“This tax cut sends a clear and powerful message to American working families with children: Help is here,” President Joe Biden said in May in remarks from the White House.
Why are families getting the money now?
Monthly advance payments under the Child Tax Credit are the result of Biden’s American Rescue Plan, a $1.9 trillion coronavirus-relief package that Congress passed in March. The law extended the tax credit, boosted the amount that eligible families could receive and provided for half of the money to be made available in monthly installments through December.
Under the new law, families claiming the credit will receive up to $3,000 per qualifying children between ages 6-17 or $3,600 for each child younger than 6. Previously, the tax credit was up to $2,000 per qualifying child under age 17.
The credit will begin to phase out for individuals earning more than $75,000 a year, $112,500 for heads of household or $150,000 for those married and filing jointly.
Before the American Rescue Plan, families eligible for the credit had to wait to claim it when they filed their income taxes.
But the new law allows half of the money to be paid in advance monthly installments. Eligible families will receive a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and older.
Who will be eligible for the payments starting Thursday, and how do you sign up?
Roughly 39 million households, covering 88% of children in the U.S., will receive the monthly payments. The payments will be calculated based on an eligible taxpayer’s 2020 tax returns. If those returns haven’t yet been filed or processed, 2019 tax returns will be used to determine eligibility and payment.
As stated before, the credit will begin to phase out for individuals earning more than $75,000 a year, $112,500 for heads of household or $150,000 for those married and filing jointly.
The payments will be sent automatically, so eligible taxpayers who have already filed their taxes don’t need to take any other action. The Treasury Department estimates that 80% of eligible families will get the payments via direct deposit.
An online portal that’s available here allows eligible taxpayers who prefer to receive the credit when they file their income taxes to have the opportunity to opt out of the advance payments.
This story was originally published in May.
Read more at usatoday.com
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