Parents will start getting a little monthly financial help starting in July. Internal Revenue Service (IRS) Commissioner Charles Rettig has confirmed the tax agency will be able to begin the payments at that time.
Before the latest pandemic aid bill signed into law in March, parents received a tax credit for each child when they filed their federal tax returns. The credit was paid as part of their tax refund.
The $1.9 trillion measure increased the amount of the credit and allowed for its monthly distribution to help families with their budgeting, especially families driven into debt by the pandemic.
But with the tax filing deadline pushed back to May 17, the IRS had warned that it was doubtful that the payments to millions of American families would begin on schedule. At a Senate hearing Tuesday, Rettig said his agency could meet the original date.
“If we end up not being on track for some unforeseen situation, we will advise you and the committee,” Rettig told Sen. Sherrod Brown (D-Ohio).
The monthly payment parents receive will depend on how many children they have and their household income. Individuals earning less than $75,000, or married couples earning $150,000 or less, will get the full benefit, which has been raised from $2,000 to between $3,000 and $3,600.
The new law increased the tax credit to $3,000 per child aged 6 to 17 and $3,600 per child under the age of six for the 2021 tax year.
Parents making more than the income thresholds will still receive the original credit -- $2,000 per child under age 17 for families making less than $200,000 annually, or $400,000 for married couples.
Monthly payments from July to December
The new, increased tax credit will come in the form of a monthly check from the IRS from July through December. The amount each family gets will range from $250 for older children and $300 for children under the age of six. The other half of the tax credit will come in the form of a tax refund in 2022.
To receive the tax credit, parents must have filed a 2020 tax return. Rettig said the tax agency won’t have the information required to distribute the payments if it doesn’t have a return on file.
Aside from filing a federal return, there are no requirements. There is also no limit on the number of children in a family getting the payments if they meet the eligibility requirements.