Child Tax Credit Checks Begin Hitting Bank Accounts

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NBC News 15 July, 2021 - 06:39pm 10 views

Is there a tax credit for a child?

The American Rescue Plan expanded the Child Tax Credit for 2021 to get more help to more families. The credit increased from $2,000 per child in 2020 to $3,600 for each child under age 6. For each child ages 6 to 16, it's increased from $2,000 to $3,000. It also makes 17-year-olds eligible for the $3,000 credit. treasury.govTreasury and IRS Announce Families of Nearly 60 Million Children Receive $15 Billion in First Payments of Expanded and Newly Advanceable Child Tax Credit

What is the child tax credit stimulus?

First, the child tax credit has been increased from $2,000 to $3,000 for children over 6, and to $3,600 for children under 6. It also expands the ages of children eligible, raising the age limit from 16 to 17. Second, the child tax credit no longer phases in with income, but instead is fully refundable. GMAChild tax credit payments begin: 6 things parents should know

Is the child tax credit for 2020 or 2021?

Just for 2021, the maximum child tax credit is $3,600 for each child under age 6 and $3,000 for each child ages six through 17 as of Dec. 31, 2021. Without the expansion, the credit would be $2,000 per child for children age 16 and under. The Wall Street JournalYour Child Tax Credit Payment Just Arrived. Are You Sure You Want It?

What time will I get my child tax credit 2021?

Answer: The IRS will make six monthly child tax credit payments to eligible families from July to December 2021. The first round of payments will arrive on July 15. After that, payments will be issued on August 13, September 15, October 15, November 15 and December 15. Kiplinger's Personal FinanceChild Tax Credit 2021: How Much Will I Get? When Will Monthly Payments Arrive? And Other FAQs

Biden administration wants to permanently extend Child Tax Credit expansion past the end of 2021

USA TODAY 16 July, 2021 - 02:10am

Senior officials within the Biden administration said the extension was agreed upon during a Senate Budget Committee meeting Tuesday.

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Biden increased child tax credit payments under his American Rescue Plan. Here's the latest on how much you'll get and when you'll get the payments. USA TODAY

President Joe Biden plans to extend the Child Tax Credit expansion — a part of the American Rescue Plan signed into law in March — past its December expiration, senior administration officials said Wednesday.

"The goal of this is not just to be one year. I think that people have somewhat different legislative strategies but I think that every advocate has the same goal: that we want this to be ultimately permanent," a senior administration official said during a press call. "There's no disagreement on that the ultimate goal is for this to go on indefinitely."

Biden's initial plan is to extend the credit for four years as a means of making it permanent, officials said.

The Internal Revenue Service will begin distributing tax credit payments Thursday with monthly payments scheduled for the rest of the year.

But making the credit permanent was one of the five main aspects of the budget agreement resulting from yesterday's Senate Budget Committee meeting, according to officials.

Around $15 billion will be distributed to approximately 39 million families and 65 million children, according to IRS estimates provided by the administration officials.

Eligible families are eligible for the expanded credit for 2021, which adds another $1,000 to the existing $2,000 Child Tax Credit for each child age 6 through 17 or $1,600 for each child age 5 and younger.  

Single parents who meet the requirement for head of household must earn $112,500 or less — or $75,000 or less if the parent is not head of household —  to meet eligibility. Married couples who filed a joint return are eligible if their combined income is $150,000 or less. The expanded credit phases out for filers with a modified adjusted income of $200,000, or $400,000 for joint filers.

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IRS begins sending monthly checks to millions of American parents in crucial test for Biden

The Washington Post 16 July, 2021 - 02:10am

At an event at the White House on Thursday afternoon with Vice President Harris, Biden extolled the benefit as representing a “historic” achievement and said it would be one of the administration’s proudest accomplishments. Biden, urging Congress to extend the program beyond this year, also emphasized that it amounts to a “middle-class tax cut” that would help working-class families make ends meet.

“It’s our effort to take another giant step toward ending child poverty in America,” said Biden, who was joined by nine families, including young children, that will receive the child tax credit.

The program is a major political and economic test for President Biden and his administration. Already, the IRS has come under fire for producing a beneficiary website that critics say is difficult to navigate. Some experts think the White House is overstating the program’s anti-poverty impact. The payments are going out amid concerns that the U.S. economy is running too hot, which means they could further fuel inflation. And the White House’s attempt to extend the program beyond December is tangled up in broader congressional negotiations, leaving its long-term fate uncertain.

But White House officials say these criticisms risk obscuring the potentially transformational impact of the new child benefit. If successful, they say, the program could lift millions of American children out of poverty — which could translate into major improvements in child nutrition, educational outcomes and mental health for an enormous number of people. The benefit also could, at least temporarily, build on goals that Democrats advanced with the passage of the Affordable Care Act by trying to expand the federal safety net for millions of families.

“This is the biggest anti-poverty effort since Lyndon B. Johnson’s War on Poverty,” said Joshua McCabe, a historian of U.S. welfare policy at Endicott College. “This is a once-in-a-longtime chance to significantly reduce child poverty.”

For the vast majority of beneficiaries, or approximately 86 percent of those receiving the payment, the new monthly benefit will be automatically deposited into their bank accounts — with no action required. Richer families are excluded from the benefit. The credit diminishes for individuals with adjusted gross income of more than $75,000, as well as for couples earning more than $150,000, and disappears altogether for higher earners.

Crucially, however, the very poorest American families are eligible to receive the benefit in full. Before this year, families were excluded from the credit if they did not earn enough for their income to be offset by the tax benefit. The stimulus repealed that limitation, meaning even Americans with no earnings would still qualify for the entire deposit amount. The benefit was also made larger and will go out monthly, instead of when taxpayers reconcile their tax returns. These changes are set to expire at the end of the year, although Democrats in Congress are preparing a $3.5 trillion spending package that lawmakers hope will extend the benefit.

The administration has said the March stimulus plan will result in child poverty falling by as much as 50 percent, citing estimates of the child tax benefit from researchers at Columbia University and others. But concerns have mounted that this number is dramatically inflated. The data kept by the IRS is often out of date, particularly for low-income families in which custodial status changes frequently. And millions of other families, often the very poorest, have never filed income taxes — which means the IRS will have trouble finding them to give them the payments.

These concerns have been intensified by criticisms that the administration’s attempts to reach these parents outside the tax system are inadequate and clumsy. An online portal — prepared in partnership with the tax preparer Intuit — has been criticized as being difficult to use, lacking a mobile option, and being accessible only in English. Rick Heineman, an Intuit spokesman, said in a statement on Thursday that the portal was prepared without cost to the IRS.

Although roughly 10 million children are in poverty, approximately 7 million children belong to households that are eligible for the payments but do not file income taxes, meaning they are at risk of being missed for the payments, according to the People’s Policy Project, a left-leaning think tank. Many, if not most, of these households are poor.

In his remarks on Thursday, Biden did not claim that the rescue plan and child payments would reduce child poverty by 50 percent, as the White House has previously. Instead, he said it would create the single greatest one-year decline in child poverty.

“I’m so happy this is happening, but everyone saying ‘Just get non-filers to file’ need to see that the system is just not designed for that,” said Jen Burdick, a lawyer at Community Legal Services of Philadelphia, which is working to enroll poor parents in the program. “We need to get them into the system, but the system is not designed to take them in.”

The White House, Department of Treasury and IRS stress that they have launched what they have described as an all-out effort to pull in as many poor families as possible that are outside the tax system.

Gene Sperling, a White House official in charge of implementing the March stimulus, said the administration got the IRS to change its plans and create a portal for Americans who do not file income taxes.

Sperling acknowledged that online portal was hard to use and should be improved. He said the portal was not secured until early May and was not viewed by White House officials until June.

Sperling also said that a 35 to 40 percent reduction in child poverty still would be roughly three times the prior biggest single-year drops in child poverty, which he said had been, at most, in the 10 to 12 percent range. Sperling also said the administration thinks 26.5 million children did not receive the full credit under the old program because their family income was too low but will automatically receive the benefit starting Thursday. He stressed that this was only the first month of a program that he said would be improved over time.

“This has the potential to be the type of historic legislation in the spirit of Social Security, in that the same policy will provide dramatic tax relief and support to families across the middle class while being the most effective tool for reducing child poverty,” Sperling said.

Roughly 470,000 people with more than 720,000 children used a portal for non-filers set up by the IRS to claim stimulus payments approved during the coronavirus pandemic.

“The hard news is this population of parents let three stimulus payments sit on the ground. This is a hard population to reach; in the worst of times, you’ve offered thousands of dollars, and they have not signed up,” he added. “That is why we must stay at it and work smarter and harder to get more people signed up.”

Some critics say these problems could have been avoided with a better policy design. Democrats insisted on excluding wealthy Americans from the benefit, arguing that rich families did not need the help. That decision also made the provision more administratively cumbersome, according to some critics, because it meant the IRS — which has data on individual incomes — had to administer the program.

“If this is not done effectively, it’s a risk for the White House as a whole and could generate a backlash that undermines the entire program,” said Sam Hammond, a poverty expert at the Niskanen Center, a center-right think tank, who helped to write a competing child benefit plan for Sen. Mitt Romney (R-Utah).

Sen. Sherrod Brown (D-Ohio), a key advocate for the measure along with Rep. Rosa L. DeLauro (D-Conn.) and other members of the House and Senate, expressed a high-degree of confidence in IRS Commissioner Charles Rettig, who was appointed by President Donald Trump, to implement the program.

“We’re going to reach the next few million in the weeks ahead,” Brown said in an interview. “I’m confident we’ll get the great majority” of children.

June Morris, 38, a program coordinator at a nonprofit organization in Long Island, will not receive the benefit Thursday. Morris’ baby was born this year, which means the IRS does not have information showing she has a child, and Morris said she is also wary of taking money that she believes she will owe to the IRS at the end of the year.

Morris’s monthly day-care bill is $1,100 — about half her total monthly income — and she was forced to move back in with her parents this year to save money on rent to afford day-care. Even receiving the monthly child benefit would not be enough to offset the crushing day-care costs meaningfully, she said.

“That’s nothing. That’s not even enough for diapers and formula,” said Morris, a single mother who said she earns roughly $55,000 per year. “If they funded these day cares, to decrease the cost every month, that would help. I’m not looking for a Band-Aid. I’m looking for something long-term. I know other countries do better.”

Still, advocates see a chance, despite the challenges, to accelerate the United States’ slow progress over the past century on economic stability for the working class.

The vast majority of people who are in poverty in the United States are outside the labor market, which means they have no income from work. In the 1930s, the government created Social Security to provide pensions to old Americans who could no longer work. In the 1950s, Social Security was extended to cover another group of people who do not work — people with disabilities — through disability insurance. In the 1970s, another group without income — college students — was helped through new education subsidies.

And now, the United States is beginning to extend aid to one of the last remaining group of nonworkers — children.

“The speed of it is striking. This was enacted in March, and this is rolling out in July,” said Seth Hanlon, a policy expert at the Center for American Progress, a left-leaning think tank. “It’s pretty amazing that four months after passage of legislation, money is going out to close to 90 percent of children.”

Alexis Figueroa, 36, of Philadelphia, said she received the benefit on Wednesday, a day earlier than expected, after a local community tax support group helped her fill out her application. Figueroa is a single mother with no income support, aside from the occasional help of her children’s father, after she was cut off from Social Security disability payments.

She is planning to use the money to take her two children to the zoo. One of them, age 1, loves polar bears; the other, age 3, is particularly excited about seeing a tiger. It will be one of the few activities the family has been able to afford since the beginning of the coronavirus pandemic.

“Emotionally, it was a relief,” Figueroa said about receiving the money. “It would be nice to take them to see the animals.”

'I can breathe a little bit more.' Millions receive child tax credit

Yahoo News 15 July, 2021 - 04:31pm

Calling it “one of the largest ever single tax cuts for families with children,” U.S. President Joe Biden on Thursday touted his administration’s expansion of the Child Tax Program – which kicked off Thursday with some 35 million American families receiving their first monthly payout from the U.S. government, aimed at reducing child poverty and the economic ravages of the health crisis.

“I think this will be one of the things the Vice President and I will be most proud of when our terms are up. It’s a reflection of our belief that the people of this country who need a tax cut aren’t the folks at the top – they’ve got plenty of tax cuts, they’re doing just fine – but it’s the people in the middle. The folks who are struggling, who are just looking for what my dad would say, a little bit of breathing room.”

VICE PRESIDENT KAMALA HARRIS: “This tax cut will be issued in monthly payments. This has never happened before [baby squeals]. [Harris, smiling in direction of baby] Yes, it is a big deal.”

Eligible families collect an initial monthly payment of up to $300 for each child under six years old and up to $250 for children 6 through 17.

Single parents earning up to $75,000 and couples making up to $150,000 can receive the full credit.

Chantel Springer - a Starbucks shift supervisor who is studying biochemistry – told Reuters she will use her first $300 to help pay the rent on the Brooklyn apartment she shares with her mother and three-year-old son.

Jess Hudson, whose two children are 10 and 14, said the $500 she will receive monthly will cover most of the cost of after-school care for her 10-year-old while Hudson finishes earning her bachelor's degree in political science.

And Michelle Rodriguez said the money she will receive for her three boys will help her (quote) “breathe a little bit more.”

Critics say the expanded credit is expensive and may discourage people from working. But supporters say the funds may enable more parents to work by potentially helping them pay for child care.

The expansion – which is said to be the biggest anti-poverty push in American since the Johnson administration - expires at the end of this year. Biden and other Democrats are pushing to extend it.

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Monthly payments will close gaps in previous tax credit system, allowing the poorest families finally to benefit “If the struggle to make ends meet is monthly, the solution has to be also,” Kamala Harris said of the new relief payments. Photograph: Evan Vucci/AP Joe Biden heralded a “giant step towards ending child poverty in America” on Thursday as he marked the beginning of the “life-changing” expansion of the child tax credit system. In remarks from the White House, the president predicted th

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