President Joe Biden said Monday that families will begin receiving part of the expanded child tax credit via advance payments starting July 15, while reiterating his intent to push for the benefit to become permanent, saying next month’s payments are “just the first step.”
Biden made the remarks in a statement on the day the White House officially designated as Child Tax Credit Awareness Day, with the president touting the tax relief measure as a way to “give our nation’s hardworking families with children a little more breathing room when it comes to putting food on the table, paying the bills, and making ends meet.”
The child tax credit, provided for in the American Rescue Plan, offers $3,000 for each child aged 6 to 17 and $3,600 per child under 6 to eligible families. The income threshold to receive the full credit is $75,000 for a single filer, $150,000 for joint filers, or $112,500 for a family with a single parent who qualifies as head of household.
Biden said organizations across the country and elected officials were holding events and training volunteers to spread awareness of how the child tax credit works, while building support for the benefit to become more than just a one-off form of pandemic relief.
“This is just the first step. My American Families Plan will extend this benefit for years to come,” Biden said in a statement on social media.
The child tax credit will be paid out in two parts, with the first half disbursed in monthly installments of $250 or $300, depending on the age of the children, starting July 15 and running through December. The other half, $1,500 or $1,800 per child, again depending on age, is to be claimed on next year’s tax return as a lump sum.
The idea behind providing part of the tax credit in advance monthly payments was to provide the benefit sooner to families who currently may be struggling, in a labor market that has been hit hard by the COVID-19 outbreak and has yet to recover to pre-pandemic levels.
“Normally, tax relief for the year only comes the following year when you file your taxes, no matter how much you need it now. This year, you’ll start getting the money in July,” the White House said in a fact sheet.
About 39 million households, covering 88 percent of children in the United States, are slated to begin receiving the monthly payments automatically, the U.S. Treasury said in a statement.
But some tax experts caution that some people may be better off forgoing the advance payments and instead choose a lump sum later. This is because some people’s changing circumstances with jobs and salaries—given the fact that the IRS uses older income to calculate monthly payments—might mean that they can end up owing money to the government next tax season if they received too much in the way of advance payments.
People who filed tax returns for 2019 or 2020, or if they signed up to receive a stimulus check from the IRS, will get the tax relief in the form of advance payments starting automatically on July 15. For non-filers, the IRS has launched a special tool that lets eligible recipients apply for the advance payments.
Since the advance payments mean that eligible individuals will see a smaller tax refund when they file next year, the IRS has said that people will have the opportunity to decline to receive them and instead choose to receive a lump sum in 2022. The agency said it would soon publish details about the opt-out, with reports indicating that this will come in the form of an online tool that will be available before July 1.
While the expanded child tax credit is currently only available in 2021, Biden wants the benefit to become permanent.