Beginning in July, low-to-moderate-income families with children are set to receive monthly payments of $250 or $300 through December as part of the American Rescue Plan to help those recovering from the pandemic.
The American Rescue plan, passed in March, will take the Child Tax Credit usual received once a year on tax returns, and distribute the money throughout a six-month period.
“Families with young kids have been especially hard hit by this pandemic and I voted to increase Child Tax Credit in the #AmericanRescuePlan to help make a real impact for North Texas families,” Rep. Colin Allred (D-Texas) said in a tweet. “File your 2020 taxes soon to ensure you receive the accurate advanced monthly benefit.”
USA Today reported that the largest increases of the Child Tax Credit will go to the lowest-income families with children.
“The American Rescue Plan expanded the existing $2,000 annual child tax credit by increasing the credit to $3,000 per child ages 6 to 17 and $3,600 annually for children under 6 for the 2021 tax year. The enhanced payments, which specifically cover teens who are 17 for the first time, start to phase out for individuals earning more than $75,000 a year or $150,000 for those married filing jointly,” CNBC reported.
Sen. Rosa DeLauro (D-Conn) said this will help the lower- to middle-class families the most.
“This is a lifeline to the middle class; it puts money in families’ pockets and it cuts all child poverty in half,” DeLauro said. “It provides children and their families with additional payments throughout the year that help them with the cost of food, child care, diapers, health care, clothing and taxes.”
According to USA Today, President Joe Biden wants to extend the program through 2025 using another initiative called the American Families Plan, but as of right now, the monthly payments will only be distributed through the end of 2021.
Calculations from the Center on Budget and Policy Priorities report that 4.1 million children under the age of 18 will be lifted out of poverty by expanding the child tax credit. Child poverty cost the U.S. between $800 billion and $1.1 trillion annually, a second CNBC report said.
The IRS will base qualification for the child tax credit off 2020 tax returns. For those who have not filed a 2020 tax return, the IRS will use the 2019 return, USA Today reported.
