Working families should expect to earn up to $3,600 per child in 2021 as part of President Joe Biden’s $1.9 trillion COVID relief plan — the latest legislation that has been providing most Americans $1,400 stimulus checks.
Half of that will be paid in cash, with monthly payments beginning this summer. They’ll be a different kind of stimulus check, assisting millions of parents with simple bills and debt repayment.
The funds come from a one-time increase in the child tax credit. The latest checks could be delayed, according to IRS Commissioner Charles Rettig, who warned a few weeks ago that the tax agency was overloaded. However, he provided Congress with more positive news this week.
The child credit cash is set to be distributed to any household with children who qualified for the most recent $1,400 stimulus check.
From July to December, if your family earns less than $150,000 or a person earns less than $75,000, you’ll receive a $250 monthly payment for each of your children aged 6 to 17. You can earn $300 if your child is under the age of six.
You’ll get a credit of $3,000 or $3,600 for this year, depending on the age of your children. The first half will be accounted for by monthly fees, with the other half being refundable next year when you file your taxes for 2021.
This temporary adjustment to the credit gives families an extra $1,600 per child to spend on whatever they want: household expenses, debt, investments, or even investing.
In previous years, you could only get a credit of $2,000 per kid, with only $1,400 refundable. Single parents making more than $75,000 and couples earning more than $150,000 may not receive the full payments under the expanded credit, but they will still be eligible for certain assistance.
From July to December, a young family with a 3-year-old and a 6-year-old can expect to earn $550 per month. If you claimed the child credit for your children last year, they’ll be included on your tax return, and you’ll be eligible for payments.
A proposal for the IRS to set up a new online platform where families can update their records, including an increase in the number of eligible children, is tucked into the relief bill.
By July, the hope is that this portal will be up and running, and you’ll be able to simply go online and enter the details about the increase in your family tree.
If you don’t update the IRS via the portal, you’ll have to wait until 2021 to claim the $3,600 credit for your newcomer family member.
Since the IRS was swamped coping with the $1,400 stimulus payments and the annual onslaught of tax returns during a later-than-usual tax filing season, IRS chief Rettig recently alerted members of Congress that the portal and monthly payments could be delayed.
It got off to a sluggish start, and the filing deadline was pushed back to May 17 by about a month.
“I don’t have the resources to devote to that portal until the filing season ends,” Rettig had told the House Ways and Means Committee. He added that getting the monthly child tax credit payments out “might be a challenge.”
During a Senate Banking Committee hearing on Tuesday, however, Rettig had a different reaction. Senator Sherrod Brown of Ohio, a Democrat, asked if the IRS planned to start sending out checks on time in July.
“We are,” Rettig said. “If we end up not being on track for some unforeseen situation, we will advise you and the committee.”
He vowed: “We will launch by July 1 with the absolute best product we are able to put together.”
It’s been a long road in helping families through this difficult time, and many lawmakers in the Senate can be thanked for their fight for what is right.
Democratic lawmakers were divided over how much assistance money to give struggling Americans during this economic downturn mostly due to the nearly year long coronavirus pandemic.
Senator Bernie Sanders (D. VT), however, thought it was a poor argument.
Sanders explained his frustration in a tweet:
“Unbelievable. There are some Dems who want to lower the income eligibility for direct payments from $75,000 to $50,000 for individuals, and $150,000 to $100,000 for couples. In other words, working class people who got checks from Trump would not get them from Biden. Brilliant!”
Sanders was not alone, with Senator Ron Wyden (D. OR), the new chair of the Senate Finance Committee, echoing with support.
The other side of the argument was being led by Democratic Senator Joe Manchin and Republican Senator Susan Collins, who are trying to keep payments from what they call “high-earning” families. Manchin offered his explanation:
“An individual of $40,000 income or $50,000 income would receive it. And a family who is making $80,000 or $100,000, not to exceed $100,000, would receive it. Anything over that would not be eligible, because they are the people who really are hurting right now and need the help the most.”
Sanders argued that the gap in Manchin’s plan, people earning between $50,000 and $80,000, included a lot of people who got two checks from the Trump administration’s relief efforts last year and are likely counting on the third one.
Wyden also echoed this point: “I understand the desire to ensure those most in need receive checks, but families who received the first two checks will be counting on a third check to pay the bills.”
Thankfully, families that most need this boost are finally going to receive help.