Child tax credit changes: How will monthly payments work?

News

(NEXSTAR) — For much of the last year, Congress has debated the size of stimulus payment checks meant to boost the economy and help the hardest-hit Americans pay down their bills. Now, a provision in the stimulus package being hammered out on Capitol Hill could result in regular checks for parents starting later this year.

The plan, which is being positioned as an advance on the tax credit, will provide a guaranteed income to families with children. For families in need of immediate assistance and are unable to wait until they file their 2021 taxes, the plan includes the option to receive monthly payments of up to $300 per child.

How will it work?

For this year only, Democrats have proposed increasing the benefit from $2,000 per child to $3,000 per child. Parents of children under age 6 would be eligible for an even larger $3,600 total credit. The plan would also include $3,000 benefits to the parents of 17-year-olds who meet plan qualifications. Previously children had to be 16 or younger.

How will monthly payments work?

While some details are yet to be revealed, here’s what it says in the bill: “The secretary shall establish a program for making periodic payments to taxpayers which, in the aggregate during any calendar year, equal the annual advance amount determined with respect to such taxpayer for such calendar year.”

According to reports, regular check distribution would begin no sooner than July and would be an advance on up to half of the total benefit. So a family receiving the benefit for one child under the age of 6 would see $300 monthly payments for six months. Between ages 7 and 17, the benefit would be $250 monthly, if approved.

Who qualifies?

  • The added payments this year would begin phasing out for couples making over $150,000, and couples making over $170,000 would see no added benefit, according to the New York Times.
  • As in previous years, single filers making under $200,000 and married filers making less than $400,000 would still be eligible for the $2,000 payments.
  • The frequency of the checks containing the first half of the payment is not yet solidified. The Treasury Department will determine how frequently checks can realistically be distributed.
  • The remaining half of the credit would still be claimed when taxes are filed.
  • The credit would be refundable, meaning you could still get the credit even if you don’t end up owing taxes.
  • Some Democrats have called for making the payments permanent.

In pushing the credit, Democrats have said this change — in conjunction with stimulus payments, childcare credits, and other relief for parents in President Joe Biden’s proposal — could reduce the number of children living in poverty by more than half, a claim based on a study by the Center on Poverty and Social Policy at Columbia University.

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Trending Stories

Don't Miss