Parents will receive monthly payments as part of the American Rescue Plan.
Typically, families with children in the United States receive childcare tax credits alongside their annual tax refunds. While this money is helpful after tax season, its annual nature means it doesn’t do much to assuage financial problems during the rest of the year. In an effort to get this money more quickly to families still ailing financially from the COVID-19 pandemic, President Joe Biden’s American Rescue Plan will put monthly tax credit payments into effect.
Starting on July 15, families with at least one child will receive tax credit payments in the form of direct deposit payments from the IRS to bank accounts, similarly to how the stimulus checks were distributed. Families will receive payments of $300 for every child under the age of 6, as well as $250 payments for every child between the ages of 6 and 18. These payments will gradually phase out for couples with a joint annual income of over $150,000. According to the IRS, around 80% of US families that qualify for these payments already have direct deposit payments set up, and won’t need to take any further action. For those who don’t have direct deposit set up, the payments will be distributed via checks or payment cards. Thanks to the child tax credit boost enacted by the $1.9 trillion relief plan, the maximum amount of child tax credits a single family can receive is now $3,600.
Government officials have said that switching the payments over from annual to monthly will help families to plan around their budgetary restrictions, though some problems with the plan are considered likely since it’s so new.
“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,” President Biden said in a statement.
“For working families with children, this tax cut sends a clear message: help is here,” he added.
