Child tax credit payments have started. Here’s what you need to know.
Monthly cash transfers to most families with children 17 years old and younger have begun and will run from July 15 through Dec. 15.
The child tax credit was expanded by the American Rescue Plan, a federal law enacted in March, to reach more families and send payments monthly.
For now, the payments are only for the tax year 2021. But experts say they will make a big difference for children and families.
“This week, the U.S. is embarking on an unprecedented social policy experiment to support the needs of low-income children and families — the most significant anti-poverty measure taken since President Johnson’s War on Poverty in the 1960s,” Lisa Gennetian, professor of public policy at Duke University, said in an email statement.
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The expansion will lift another 4.1 million children in the country above the poverty line, reducing the number of children in poverty by more than 40%, according to the Center on Budget and Policy Priorities, a Washington research and policy institute.
In North Carolina, 92% of children under 18 years old — about 2.09 million children — could benefit from the expansion, the center says. An estimated 137,000 children younger than 18 across the state could be lifted above the poverty line.
“It will make a big difference,” said Marsha Basloe, president of the nonprofit Child Care Services Association (CCSA). “But if we can continue it, the overall impact on child poverty will be just unbelievable.”
How much are the payments?
The monthly payments make up half of the tax credit. Families will receive the other half when they file their taxes next spring.
Families will receive totals of up to $3,000 for each child between 6 and 17 years old and $3,600 for each child under 6 years old. That means eligible families can expect to receive $250 per month for each child 6-17 years old and $300 per month for each child under 6 years old.
The Internal Revenue Service (IRS) has a tool that calculates how much a family can receive.
Who is eligible?
Families are eligible to receive the full amounts per child listed above if their incomes are less than $75,000 for households with a single filer, $112,500 for head-of-household filers, and $150,000 for married couples jointly filing.
Families who filed their taxes in 2019 or 2020, or received stimulus payments in 2020, will automatically receive the monthly payments. If they did not, individuals must use the IRS’s Child Tax Credit Non-filer Sign-up Tool to receive the credit.
The family must have a main home in one of the 50 states or the District of Columbia for more than half the year. Individuals do not need a permanent address to receive the credit. A main home could be “your house, apartment, mobile home, shelter, temporary lodging, or other location and doesn’t need to be the same physical location throughout the taxable year,” according to the IRS.
People who need help filling out the form may contact the United Way by dialing 211 or going to www.211.org. A family can sign up any time this year.
No impact on other benefits
The tax credit does not count as income for families. So the tax credit will not affect other federal benefits, such as the Supplemental Nutrition Assistance Program (SNAP); SNAP for Women, Infants and Children (WIC); Supplemental Security Income (SSI); Medicaid, or public housing.
Do you need a Social Security number?
To receive the credit, the child needs a valid Social Security number and the individual (as well as the spouse if filing jointly), must have either a Social Security number or an IRS Individual Taxpayer Identification Number (ITIN).
The child or children must be born before 2021, have a Social Security number issued before May 17, 2021, and must live with the parent or caregiver for more than half the year. The child can be “the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, a grandchild, niece, or nephew),” according to the IRS website.
For exactly what you need and step-by-step information on how to fill out the non-filer tool, see this flier by CCSA, or use the IRS guide in English or in Spanish.