Child Credit Payments Thursday May Surprise Many Parents

Number of the Day: The most relevant or interesting figure in personal finance

50%

That’s the share of parents with children under 18 who likely qualify for the new child tax credit but don’t realize it, a new poll shows as the first round of monthly payments are set to hit bank accounts Thursday.

Many parents are either confused by or unaware of the federal government’s 2021 child tax credit, the results of an Ally Bank survey of 1,000 people last week shows, signaling it may be quite a surprise when monthly payments of up to $300 a month per child land in bank accounts Thursday. 

Of 436 surveyed parents likely eligible because they have kids under 18, only half were expecting to receive any money and only 71% knew of its existence, Ally said. Of the parents who thought they wouldn’t get the credit, not knowing how to be paid or otherwise access the funds was the most common reason for not expecting the payments. Not only that, but at least 47% of parents were off the mark when estimating how much their monthly payments would be.

The payments will automatically be delivered to eligible people who have filed tax returns recently, unless they choose to opt out in favor of receiving the payments as a lump sum at tax time. Those who don’t file taxes can register for the credit with a tool on the IRS website.

The findings suggest the IRS’s publicity campaign about the first-of-its-kind tax credit hasn’t been entirely successful. Overhauled by the American Rescue Plan pandemic relief bill in March, a bigger credit is available to more people this year. The monthly payments, which will last through December, are an advance on half the full amount (up to $3,600 per child,) and the other half will come at tax time, as usual.