The Internal Revenue Service (IRS) and Department of Treasury on Aug. 13 confirmed that about $15 billion in child tax credit payments has been sent to families, according to the White House.
The agency said that nearly 61 million children would be affected by the move. Some recipients may face delays, although many are receiving the funds via direct deposit.
“Today 61 million children across America are benefiting from the advance Child Tax Credit, helping families put food on the table and meet the needs of the next generation,” Deputy Treasury Secretary Wally Adeyemo said in a statement on Aug. 13. “We want every eligible family to have access to the advance Child Tax Credit, which is why we will continue our outreach efforts to drive enrollment as our children return to school.”
The child tax credit payments were authorized as a provision under the Biden administration-backed American Rescue Plan approved by both houses of Congress earlier this year. Eligible families could receive as much as $300 per month for each child under the age of 6 and $250 for each child aged 6 and older.
In the meantime, about 15 percent of families who got a direct deposit in July will get a paper check sent to them in the mail for their August payment because of a “technical issue,” according to the announcement. The problem should be resolved, according to the Treasury Department, by the next payments on Sept. 15.
Some experts have said that certain families may want to opt out of the child tax credit payments. If the government pays too much, it will come out of their taxes next year.
“Unlike the economic impact payments that were distributed last year, the child tax credit payments have to be paid back if too much was given,” Dennis Linden, a certified public accountant, told Yahoo in June. “It can be a very unpleasant wakening in April of 2022 when the 2021 tax return is filed.”
Families who saw their income increase significantly in 2021, recently filed for divorce, or who owe money to the IRS may want to unenroll from the payments, Linden and other experts have said.
“The child tax credit—up to now—typically is used to reduce a taxpayer’s tax liability at the end of the year,” David Flamer, CPA and president of David R. Flamer, An Accountancy Corporation, told Yahoo. “They may forget how the credit usually pays in part the tax related from their work, and they may owe tax next year.”
Taxpayers can use the Child Tax Credit Update Portal website to opt out of the monthly payments and will receive the full credit after they file their tax returns for 2021.