Joe Biden's Expanded Child Tax Credits Coming To Your Bank Account Near You!
Good for kids, good for America!
The expanded Child Tax Credit (CTC) is set to start delivering monthly payments tomorrow to millions of American families with kids aged 17 or younger. As part of the American Rescue Plan, the tax credit was expanded from $2,000 to $3,600 for each child under the age of 6, or 3,000 for kids aged 6 to 17.
Half of the expanded credit will be sent to qualifying families, broken into in six monthly payments through the end of the year. The other half of the credit will go out in a lump sum at tax time. Families with bank information on file with the IRS will get the payments by direct deposit, while those who don't will be sent a check. You can check your eligibility and make sure you're enrolled at a special IRS website for the child tax credit. Be sure to pass that link on to folks who you think might need it, too!
While the biggest goal in expanding the CTC was helping get kids out of poverty, eligibility for the credit goes well into the middle class, too. The full credit is available to single taxpayers with income up to $75,000 annually, or to families filing jointly with incomes up to $150,000 a year. And partial payments, reduced incrementally by $50 for each $1000 of income over those amounts, will be available to folks making up to $95,000 singly or $170,000 jointly. The IRS anticipates about 36 million households will qualify for the expanded credit.
Qualifying tax filers will automatically be enrolled for the monthly payments; some taxpayers on the upper end of the eligibility scale may find a greater tax advantage in opting out of the monthly payments. That can also be done at the IRS site.
CNET has a good, regularly updated 'splainer here on how the credits work, how to decide whether opting out is a good idea, and general information on the expanded CTC.
What If You Didn't File A 1040 for 2020?
Parents who didn't have to file a tax return for 2020 can still sign up for the credit, even if they don't usually pay taxes. The IRS set up a "Non-filer sign-up tool"where those folks can sign up and get the credit. Or if they choose to, they can also file a 2020 tax return; the IRS is even offering"free tax days" in 12 major cities where people can get help preparing a return.
Why Is This Any Better Than Getting A Credit When You File Your Taxes?
1) As we note above, the expanded Child Tax Credit is available even to people who normally don't make enough income to file, so that's a hell of a nice thing.
2) Some people (like, say, Politico), have griped that some taxpayers may find it makes more sense to delay the expanded credit until they file their taxes, and why is the government messing things up by enrolling everyone automatically? Easy answer to that: It's not really a disadvantage for most taxpayers, and many will like a little extra money. Those who don't can easily opt out here.
2a) "But it's the same amount of credit as I'd get at the end of the year and this will just mess up my accounting!"
No it's not, it's more — particularly, again, if you were ineligible for the child tax credit before because you were too poor to pay federal income tax. I mean, it's math, jerks. Three thousand is more than two thousand. But you can still opt out of the monthly payments here. Even if you get an automatic payment this week, you can stop the other five. This is good for lots of people who have been living paycheck to paycheck, so click the clicky and then do the lump sum, and be glad you're not so desperate as to need it this month because a red state governor eliminated your unemployment, OK?
3) There is no #3.
Now what Congress really needs to do is continue this sucker in the upcoming reconciliation bill, so the credit can keep fighting child poverty. And not incidentally, so Democrats can force Republicans to explain to a huge majority of voters why they want to eliminate the benefit if they take over Congress in the midterms.
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