The $ 3,000 child tax credit is due to begin in July, according to the IRS
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But on Tuesday, when Senator Sherrod Brown, an Ohio Democrat and senior member of the Senate Banking Committee, asked Rettig if the IRS was ready to begin monthly child tax credits in July, he had a simple answer.
“That’s us,” said Rettig. “If we are not on the right track in an unforeseen situation, we will advise you and the committee.”
$ 300 per month for children under six
The full loan is available to those with children who have an Adjusted Gross Income of less than $ 75,000 or $ 150,000 for a married couple applying together. The additional benefit will be phased out for taxpayers making more money and will no longer be filed for those earning $ 95,000 and married couples earning $ 170,000.
Taxpayers earning more will still be eligible for the regular child tax credit, which is $ 2,000 per child under 17 for families earning less than $ 200,000 per year or $ 400,000 for married couples.
“It is trying to put the greatest benefit in the pockets of families with the lowest incomes,” said Elaine Maag, research fellow at the Urban-Brookings Tax Policy Center, of the loan.
The extended credit is slated to be paid monthly to families starting in July and runs through December 2021. The monthly amounts are typically $ 250 for older children and $ 300 for children under six. Families will draw the remaining half of the loan when they file their 2021 income tax return.
There is no limit to the number of children in a family who can receive the credit as long as they meet the age and income eligibility requirements.
According to Rettig, families with children must file a 2020 tax return to receive the credit. If a family doesn’t file a return for 2020, the agency won’t have the information they need to provide the loan.
“The sure way is to get a tax return now,” said Maag.
Unsurprisingly, the IRS worked hard to deliver this benefit in a timely manner, but the real test will be in July, she said.
“Hopefully he’s right that they think they can deliver a correct balance from July, but if not they’ll do the best they can and maybe deliver it a little later,” she said.
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The importance of the CTC
The child tax credit is an integral part of the plan to lift millions of children out of poverty. A family of four earning less than $ 150,000 could see more than $ 14,000 in pandemic relief from the expanded child tax credit and $ 1,400 in stimulus checks for adults and children this year.
According to a study by the Institute for Taxes and Economic Policy, around 83 million children live in households that would benefit from the expansion of the child tax credit. In addition, the poorest 20% of families would see an income increase of more than 37% in the year the policy is introduced.
One point of criticism, however, is that the loan is only extended by one year. After 2021, the extended credit will cease and families will see a smaller increase in their income unless more laws are passed to continue or build on the new rules.
To see how much to expect, the personal finance website Grow has created a calculator that takes into account your enrollment status, annual income, and the number of your loved ones.