In less than 36 hours, 39 million U.S. families will receive their first expanded child tax credit payment.
Approximately 65 million children in the country will benefit from the expanded funds going out Thursday, according to CNBC.
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This newly expanded credit is part of the American Families Plan signed by President Joe Biden in March in an effort to reduce child poverty and grow the middle class. This year, the maximum annual credit is $3,600 for children under 6 and $3,000 for children between 6 and 17. Half of the credit will be distributed as an advance as six monthly installments, with the largest being $300 for children under 6 and $250 for children aged 6 to 17.
“Help is on the way in a very big and significant way,” said Democratic Sen. Majority Leader Chuck Schumer about the credit.
Families with a joint income less than $150,000 and an individual income less than $75,000 will receive the maximum credit. Credit amounts decrease for families with join income between $150,000 and $170,000 and for individuals who make between $75,000 and $95,000. Credit payments cease for families with joint income over $170,000 and individual income over $95,000.
However, individuals making up to $200,000 annually or couples making up to $400,000 jointly are still eligible for the regular child tax credit totaling up to $2,000 per year for children under 17.
Most families who have filed their 2020 or 2019 tax returns will not need to do anything to receive the credit. Those who did not file but used the Internal Revenue Service nonfiler tool last year to register eligible family members for stimulus payments will also be automatically enrolled, said CNBC.
Eligible families were sent letters regarding the amount they can expect to receive on the 15th day of each month for the next six months. There is also an online eligibility tool available in English and Spanish. Other information and an opt-out option for monthly payments are available on the Child Tax Credit Update Portal.
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Most payments will be made via direct deposit, some will be sent via check and later some may be provided on a debit card. Next month, recipients should be able to update their mailing address and, eventually, other information.
So far, taxpayers are expected to receive the second half of the credit when they file their 2021 taxes, though that could change if lawmakers decide to extend the credit for future years.
Analysts say the tax credit could lift retail, restaurant and travel sales, according to CNBC.
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