The American Rescue Plan is delivering critical tax relief to middle class and hard-pressed working families with children. With today’s announcement, about 90% of families with children will get this new tax relief automatically, starting in July. While the American Rescue Plan provides for this vital tax relief to hard working families for this year, Congress must pass the American Families Plan to ensure that working families will be able to count on this relief for years to come. For working families with children, this tax cut sends a clear message: help is here.
The families of more than 65 million children will start receiving enhanced child tax credit monthly payments of up to $300 on July 15, the Biden administration announced Monday.
The Internal Revenue Service commissioner confirmed the agency expects to launch its portal for the credit on July 1, despite concerns about the challenges the IRS would face implementing a program so quickly after the passage of the American Rescue Plan.
As part of the COVID relief package signed into law by President Joe Biden in March, the child tax credit was increased for one year with children ages 6 to 17 eligible for a $3,000 credit and children under 6 getting $3,600. The legislation also makes the benefit fully refundable and expands it to low-income families. For the first time, it also shifted half of the credit to advanced direct payments which the IRS was assigned to distribute starting in July, a move that is expected to boost millions of children out of poverty.
Children younger than 6 would receive $300 a month in the second half of the year while kids 6 and older will receive $250 a month.
The temporary benefit, which will be sent to 39 million households and covers 88% of children in the US, stems from the Democrats’ $1.9 trillion coronavirus rescue package. The vast majority of families will receive the funds via direct deposit, while the rest will get checks or debit cards in the mail.
The Internal Revenue Service will send the payments on the 15th of the month, unless it falls on a holiday or weekend, through December. Eligible parents will receive $300 a month for each child under age 6 and $250 for each one ages 6 to 17.
To reach low-income households that don’t typically file taxes, the agency is setting up a portal to allow them to submit their information. This will allow them to claim both the enhanced child tax credit and stimulus payments they might have missed. A similar online form existed last year to allow low-income Americans to receive the first round of stimulus checks from the March 2020 relief package.
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