Child Tax Credit payments start to hit bank accounts July 15

Millions of families with children are set to receive direct payments this week as the first round of advanced Child Tax Credit payments will be distributed Thursday. Democratic lawmakers and administration officials hope the money, part of the latest round of COVID-19 pandemic relief passed earlier this year, is just the beginning.

An estimated 36 million households are eligible for the direct payments, which will start Thursday and go out monthly through the end of the year. It’s a provision of American Rescue Plan, which expanded the Child Tax Credit to $3,600 per child younger than six and $3,000 per child ages six to 17, made it fully refundable and advanced half of it to families as monthly installments. Households with children six years old and younger will receive $300 per child each month, while families with children six to 17 will receive $250 for each of the next six months. 

President Joe Biden is set to mark the first payments going out with remarks Thursday. 

More than 65 million children will be covered by the increased credit, approximately 88% of all children in the United States, according to the Biden administration. Policy experts say the move will slash the child poverty rate in the United States nearly in half, with an even greater impact for Black and Hispanic children. 

“It’s the most progressive change to America’s tax code ever,” said Senator Michael Bennet of Colorado on Wednesday. He introduced a plan to overhaul the Child Tax Credit and deliver payments on a monthly basis in the Senate back in 2017. “It’s the single biggest blow to child poverty in American history.”

Democrats — some of whom, like Connecticut Representative Rosa DeLauro, have long advocated similar policies — are pushing to extend the monthly Child Tax Credit payments beyond 2021. As part of his proposed American Families Plan, Biden has called for the monthly payments to be extended through the end of 2025.

While members of the Senate hash out a bipartisan infrastructure deal, Democrats are also preparing to use the so-called reconciliation process that allows them to pass other components of the Biden agenda without needing 60 votes in the Senate. The increased monthly Child Tax Credit payments would be part of that $3.5 trillion budget resolution. Discussions on how long to extend it are ongoing, but Senator Ron Wyden of Oregon, whose Senate Finance Committee would be responsible for drafting it, has said his goal is as long of an extension as possible. 

“It will be extended for sure for a very significant amount of time, and we will see if we can get the permanence that we are fighting for,” Senate Majority Leader Chuck Schumer of New York said at a press conference last week on the matter. He reiterated his call to make the expanded tax credit a permanent part of the tax code Monday on the Senate floor.

Some Republican lawmakers have proposed their own monthly payments for children, but none are expected to get on board with the Democratic version being passed as part of a reconciliation package. No Republicans voted for the American Rescue Plan, which included the temporary increased Child Tax Credit.

Children advocacy groups are also pushing to make the expansion permanent — arguing it cannot be left up to future lawmakers to ensure the benefits going to millions of families continue. 

“We talk a lot about potentially cutting child poverty in half, but if you just flip your perspective on that, allowing this program to expire in some future year is akin to basically allowing a doubling of the child poverty rate when this policy goes away,” said Zach Tilly of the Children’s Defense Fund.

In the meantime, lawmakers, advocacy groups and the Biden administration have been working to bring awareness to the monthly payments and make sure low income Americans who have not to file taxes are in the tax system to receive the payments. 

The vast majority of payments are expected to be delivered through direct deposit, similarly to how stimulus checks were delivered earlier this year, the IRS has said. For those without direct deposit bank information in the IRS systems, households will also receive the payments by mail. 

The IRS over the weekend held a series of events in 12 cities across the country over the weekend to help people who don’t normally file taxes to get the payments and set up a series of online tools to help non-tax filers eligible for the child tax credits sign up to receive payments as well as check their eligibility for payments. 

On Monday, the IRS expanded some of its child tax credit material to Spanish and other languages to help reach eligible families. Other groups have launched a series of public awareness campaigns on multiple platforms.

To receive the full amount, eligible families include single parent head of household filers making up to $112,500 and married couples who file jointly with a combined income up to $150,000 per year.