BUFFALO, N.Y. (WBEN) - The IRS on Thursday will issue its first checks to parents across the country as part of the child tax credit.
The credit is $3,000 per child between the ages of 6 and 17 and $3,600 for children under 6. Half of the credit will be given as an advance to parents in monthly installments through the end of the year. For each child under 6, the family will receive a $300 check. Parents of children age 6 and older will receive $250 in July.
IRS: Advance Child Tax Credit Information
Christopher Fabian, the Vice President of Operations at EG Tax, gave the example of a family with children ages 5 and 8. The parents would receive $550 a month through the end of this year, which would amount to $3,300.
But he said this is not the latest stimulus. It's an advance of the 2021 tax return.
"On their tax return for 2021, there's going to be the child tax credit and it's going to calculate for $6,600," he said in reference to the above scenario. "Then they're going to say 'How much did you receive during the year for an advance?'. Then they're going to have to plug in the $3,300. Now, instead of getting the $6,600 on their tax return, they're only going to get the $3,300 because they already got the $3,300."
Fabian said the confusion by this program has yielded "easily" 60 calls per day at EG Tax.
"The majority of the callers are calling it stimulus four," Fabian said. "This isn't a stimulus. This is just an advancement of your tax return and that's where people are getting a little confused is the advancement instead of free money."
Single parents who earn up to $112,500 and married couples with incomes up to $150,000 are eligible for the benefit.
For now, the advance of the child tax credit will only be applied for this year. However, there is a federal push by democrats to make the advance on the child tax credit permanent. In February, House Democrats introduced the American Family Act of 2021, which would make the credit fully refundable, increase the amount of the credit, require the credit to be adjusted annually for inflation, and require the Department of the Treasury to create a program for making advance payments of the credit on a monthly basis.
Congressman Brian Higgins is among the democrats who support the bill
"It's a guaranteed income for kids," Higgins said. "It's social security for kids. It's pulling 50% of the American population out of poverty, including 50% of this community. That is an investment in human capital and an investment in the future of our communities by investing in those who are the future of our community."
No republicans have co-sponsored the bill. We reached out to Congressman Chris Jacobs' office but did not receive a response. There is also no bill in the Senate.
Fabian said tax professionals said there may be another impact on your future tax return.
"The IRS is still 18 million returns behind on refunds," Fabian said. "That's because they have to check every person who says they did not get their stimulus money or unemployment changes. They're holding those returns to look at them and review them closely. Imagine next year if you're saying 'I never received any advancement of my child tax credit' or 'I did receive some of it'. I could see the IRS next year potentially delaying giving people their refunds who claim the child tax credit because they're going to investigate it even further to make sure they're entitled for a refund and if that's what it's supposed to be."
