IRS Sends First-Ever Monthly Child Tax Credit Payments

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

$15 billion

That’s how much the IRS sent out to parents around the country Thursday, marking the first round of monthly payments from the newly reinvented child tax credit. 

The first-of-their kind payments—up to $300 per child, depending on their age and the family’s income—were distributed to households with nearly 60 million eligible children, government officials said in a statement Thursday. Most went out as direct deposits to bank accounts in a transaction labeled “ChildCTC,” officials said, while the remaining 14% were distributed as paper checks that should arrive Thursday or in the coming days. 

“It’s a middle-class tax cut,” President Joe Biden said at the White House Thursday.  “This can make it possible for a hard-working parent to say to his or her child, ‘Honey, we can get you new braces now. Or, ‘We can get you a tutor to help you with that math class you’ve been having trouble with. We can get you the sports equipment you need to sign up for the first team you’re going to play on.’” 

While the credit itself isn’t new, it was dramatically overhauled for 2021 as part of Biden’s signature American Rescue Plan, a $1.9 trillion pandemic relief bill passed in March. Not only is the new credit a maximum of $3,600 per child, rather than $2,000, but families struggling the most financially now qualify. Previously lower-income families weren’t eligible for the full amount (or in some cases, any money,) because they didn’t have the income to justify a tax offset.

Those who don’t normally file taxes can register to claim the child tax credit at childtaxcredit.gov.

Perhaps most noticeably, however, is the new timing. For the first time ever, the credit is coming in monthly installments. Unless eligible taxpayers opt-out of the advanced payments, funds totalling half of the full amount will be delivered on the 15th of each month for the remainder of the year, while the rest will be applied at tax time, as has traditionally been the case. These changes are only for 2021, though Biden and other Democrats hope to extend it at least through 2025.

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