Saturday May 28, 2022
Advance Child Tax Credit Payments Sent to 35 Million Families
Treasury Secretary Janet Yellen stated, "For the first time in our nation's history, American working families are receiving monthly tax relief payments to help pay for essentials like doctor's visits, school supplies and groceries. This major middle-class tax relief and step in reducing child poverty is a remarkable economic victory for America - and also a moral one."
The American Rescue Plan increased the credit from $2,000 per child in 2020 to $3,600 for children under age 6 and $3,000 for children from ages 6 to 17. For the first time, half of the credit is also being sent in monthly payments. The balance of the credit will be available when individuals file a 2021 tax return early next year.
Projections show that ACTC payments will lift five million children out of poverty. This could cut America's child poverty in half.
The expanded payments this year will enable an additional 26 million children to benefit. If a couple has a combined income of $60,000 and two children under age 6, the Child Tax Credit will be $7,200. This family could receive six payments of $600 each month for the last half of this year. The remaining $3,600 would be a tax credit when they file their 2021 tax return.
For the July payouts to 35 million families, approximately 86% of the payments are by direct deposit and 14% are checks sent through the mail.
Many low-income families received ACTC payments because they signed up for Economic Impact Payments last year. While most of these individuals have lower incomes and do not file federal tax returns, an estimated 720,000 children will benefit from ACTC payments because their families signed up for Economic Impact Payments.
Other families used the Non-Filer Sign-up Tool on IRS.gov. The IRS has published step-by-step guides in multiple languages about how to use this tool. The IRS also hosted educational events in 12 cities in early July. These events were targeted toward cities with large numbers of households who normally do not file federal income tax returns.