A provision of the American Rescue Plan is being readied for action, targeting nearly 90 percent of American households with children to receive monthly payments of the Child Tax Credit.
The Internal Revenue Service and the Department of the Treasury expect to send out the first monthly payments of the expanded Child Tax Credit (CTC) on July 19.
Payments are targeted to some 39 million households, which would cover 88% of the children in the U.S.
How will it work?
Monthly payouts for the Child Tax Credit were made possible by the American Rescue Plan that was passed into law in March of this year. The law increased the maximum cap to $3,600 for children under age 6 and up to $3,000 per child for those between age 6 and 17.
The ARP also made the credit advanceable, enabling regular payments to qualified families.
The recurring CTC payments will be made on the 15th of each month, unless the 15th is a weekend or holiday. Those families who get the credit via direct deposit will be able to plan around the regular receipt of the payment.
Qualifying families receive a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and up.
Projections suggest the plans for the CTC could cut child poverty by more than half.
Direct deposit is the way to go
The monthly payments will go out to families – benefiting more than 65 million children—by way of direct deposit, paper check or debit cards.
The IRS says it’s committed to making the most of the direct deposit delivery option for fast, secure delivery.
Most taxpayers won’t have to take any action to get advance CTC payments. However, the IRS and Treasury say they’ll continue to work with partner groups to make even more families aware of the benefit.
An IRS press release on the CTC payouts credits the project to teamwork among four governmental bodies: the IRS, the Department of the Treasury, the Bureau of the Fiscal Service and the White House American Rescue Plan Implementation Team.
More information on how taxpayers can access the Child Tax Credit will be available soon at IRS.gov/childtaxcredit2021.