The IRS recently released more information about when the expanded child tax credit will start.
Monthly payments of the new child tax care credit provided under President Joe Biden’s $1.9 trillion pandemic relief law will start hitting bank accounts July 15, the IRS announced.
The subsequent five payments will be sent the 15th of each month until December (except when the 15th falls on a holiday or a weekend), according to the IRS.
The IRS also said it would launch two portals July 1. One portal will allow parents to register for the payments if they don’t typically file a tax return. The other portal will allow parents to make updates if there is a change in the number of dependents or if they want to opt out of the monthly payments.
Eligible families have the potential to receive up to $3,600 per child in the form of $300 monthly installments on top of the $1,400 stimulus checks and unemployment benefits that have already been doled out to millions of Americans still struggling amid the coronavirus pandemic.
The credit temporarily increases the existing child tax credit from a maximum $2,000 a year per child.
For children age 5 and under, the new credit is $3,600, or $300 a month; and for ages 6 to17, the new credit is $3,000, or $250 a month.
The credit has an option for families to receive advance monthly payments that will be split up between 2021 and 2022, and then applied to next year’s tax returns. The plan was set up this way to get money to people sooner rather than having to wait to file next year’s taxes.
The “advance payments” would arrive monthly from July through December, and then the second half would come in a lump sum with tax refunds in April 2022, according to reports.
The change will be in effect for a year under the rescue law, and Democratic lawmakers have indicated they want to make this a permanent change.
The IRS faced a July 1 deadline to implement the groundbreaking tax program, which is aimed at reducing child poverty among lower-income families.
IRS Commissioner Charles Rettig said it will cost the agency nearly $400 million and require the hiring of 300 to 500 people to get the new monthly payment system and electronic portal up and running for the child tax credit. “The IRS will be working hard to deliver this program quickly and efficiently,” he recently told the Senate Finance Committee. “If we end up not being on track for some unforeseen situation, we’ll advise you and the committee.”
By including the child tax credit in the American Rescue plan, congressional Democrats sought to address income inequality and provide support to parents who were forced to cut down on work or give up jobs to take care of children after losing access to child care. According to some estimates, the credit will reduce the number of children living in poverty in the U.S. by more than half.
Republicans, however, have criticized the initiative as an expansion of welfare, saying it removes the incentive for parents to seek work.
The new child tax credit “is not targeted to pandemic relief, and risks the loss of billions of taxpayer dollars in fraudulent and improper payments,” Rep. Kevin Brady of Texas, the senior Republican on the House Ways and Means Committee, wrote in letters to Biden administration officials.
At a recent hearing, Sen. Charles Grassley, R-Iowa, said he was concerned the new tax benefit will remake the IRS’ role into a “social welfare-oriented” agency.
“We have to create a new structure,” Rettig said, adding the tax-collecting IRS is “not historically” a benefits agency. The IRS, which has suffered budget cuts during the past decade, has been further burdened by the pandemic and the task of sending out hundreds of millions of economic stimulus payments in three rounds.
Information provided by The Associated Press was used to supplement this report.
