Among the many provisions included in the American Rescue Plan is the expansion of the Child Tax Credit (CTC) in 2021 to $3,600 per child under the age of 6 and $3,000 for children from 6 to 17. It was announced on Monday that one-half of the CTC will be provided in the form of direct payments to families (the other half being credited back to eligible households on their 2020 federal tax returns) beginning in July and continuing through December of 2021.
Nearly 40 million U.S. households will benefit from the CTC expansion which covers 88% of America’s children. On July 15, 2021, most eligible families will begin receiving direct payments of $300 for each child ages 0 to 5 and $250 per child from the ages of 6 to 17. Subsequent payments will be distributed on or around the 15th of each month through the end of 2021. The majority of payments will be distributed either through direct deposit into a bank account, paper checks via U.S. Mail, or pre-paid debit cards.
As was the case with three rounds of Economic Impact Payments, most households won’t need to do anything in order to receive their CTC payments. However, the U.S. Treasury and Internal Revenue Service are seeking to “maximize the use of direct deposit to ensure fast and secure delivery” of payments. The Treasury Department and the IRS will also partner with other agencies in an attempt to make sure that all families that qualify for the expanded CTC in 2021 are “aware of their eligibility” and take steps to receive their full payment.
It is estimated that the expanded CTC will lift over five million American children out of poverty in 2021, cutting the current child poverty rate in this country by more than half. Although the current CTC expansion is slated to end in December 2021, there are legislative proposals that would extend it beyond the current year. Community Action will continue to provide details regarding any further CTC updates on our Working Together blog and social media platforms including Facebook and Twitter. And, for more information on the expanded CTC and how qualifying households can make sure to access their payments and accompanying tax credit, please visit this dedicated webpage.