About The Expanded 2021 Child Tax Credit Program

Overview of the Expanded Child Tax Credit (CTC) Program

The expanded federal Child Tax Credit kicked off its first monthly cash payments Thursday, July 15, when the IRS began disbursing direct deposit payments and checks to eligible families with children ages 17 or younger. The government’s enhanced credit programs are an effort to use tax breaks to help provide a safety net for parents who have had trouble making ends meet due to the pandemic.

The estimated $15 billion in payments to almost 36 million families of nearly 60 million children were sent out starting this week as part of a greatly expanded Child Tax Credit program. The total scope of the program is estimated to cost over $100 billion for this one-time expansion, including 50% more credits per family than what was available before.

The enhanced Child Tax Credit program has actually been in place since the late 1990s, and is similar to policies in Germany and the United Kingdom. It was initially introduced to help low- and moderate-income households when they needed it most. President Biden’s American Rescue Plan Act authorized an expansion of this tax credit, as well as advance payments on a monthly schedule now as opposed to waiting for a lump sum during tax season, with the idea that quick monthly payments would provide Americans assistance during tough times.

Child Tax Credit Payment Sizes and What to Expect

This CTC expansion boosts the previous credit of $2,000 to $3,600 for each child under 6, or $3,000 for children ages 6 to 17. It also makes these advance payments “refundable” – meaning people can get it even if they don’t owe federal income tax. This will increase the number of low-income households that qualify and receive payments. Now, even those who do not owe federal income taxes can get a $1,400 credit for each qualifying child under age 17. There are some caveats that may exclude certain taxpayers; single filers making over $75K or joint filers with incomes of over 150k will be eligible only for a reduced amount based on their household earnings regardless of how many children they have in total — but these limits will still mean most Americans earning above them can qualify through the regular tax code ($2,000 per child).

The average benefit that more than 90% of families with children will receive under this expanded Child Care Tax Credit program is $4,380, according to the Tax Policy Center.

Schedule for Child Tax Credits

To understand when this money is going to be sent out, the IRS has provided the following dates for these monthly payments, to be sent by direct deposit or check:

• Thursday, July 15
• Friday, August 13
• Wednesday, September 15
• Friday, October 15
• Monday, November 15
• Wednesday December 15

How To Sign Up for Child Tax Credit Payments, Check Your Status, or Opt Out

The IRS is using information from 2019 or 2020 tax returns to determine eligibility. If you qualify for the CTC payments and filed federal taxes in 2020, the IRS will automatically send your monthly payments. If you do not file taxes, register for an account using this website, which is also how you can manage your CTC payments or opt out:

• IRS Child Tax Credit Update Portal – https://www.irs.gov/credits-deductions/child-tax-credit-update-portal
• IRS Child Tax Credit Eligibility Assistant – https://apps.irs.gov/app/ctceligible/

If you want to make changes to how the IRS sends payments, like adjusting your bank information, please use the link above. You also will need a username and password, so if this is your first time logging in to the IRS website, be prepared to create an IRS account or ID.me account. This is also the URL you’ll use if you decide to opt out, which is not removing yourself from receiving the credit, just delaying it until tax season.

Quoted: What People Are Saying About the Expanded Child Care Tax Credits

• “Families would be smart to confirm the account that the IRS has on file for them, and any other particulars that would be necessary to receive the credit.”- Tim Flacke, executive director of Commonwealth, a social impact nonprofit
• “What I am hopeful for is that the power and the magnitude of what these checks mean for so many Americans is going to force the hand of politicians to make this permanent.” – Aisha Nyandoro, CEO of the nonprofit Springboard to Opportunities
• “There is substantially more to lifting families out of poverty than government-provided income. If pulling families out of poverty were as simple as handing moms and dads a check, we would have solved poverty a long time ago.” – Senator Marco Rubio of Florida
• “It’s a very important program that will do a huge amount to relieve child poverty, which has been a tremendously important problem in the United States.” – Treasury Secretary Janet Yellen
• “It’s a massive expansion of a credit that’s been around for a long time but only helped some families. This will help virtually all families.” – Natalie Foster, co-chair of the Economic Security Project
• “Giving cash to families with children will both reduce child poverty today and increase mobility out of poverty tomorrow.” – Christopher Pulliam and Richard V. Reeves of the Brookings Institution
• “When money from the government is in the news, we know scammers are about to run their standard playbook. They may call, email, text or DM you. They’ll say they can help you get your payments earlier (they can’t), get you more money (also no), or tell you other lies (for sure).” – Lisa Lake, a consumer education specialist at the FTC

How This Impacts Employers and Unemployment

By providing parents with extra spending money, they will have a better opportunity to afford Child Care, a critical component for parents who are currently working or looking for employment. The extra spending power means that more parents will have the ability to afford critical care choices that impact their professional careers, such as summer camp or daycare, which can only be a good thing for both employers and Child Care providers as well.

Employers can couple the federal relief from the expanded Child Tax Credit with the  ‘Employer-Provided Child Care Credit’ (link) a federal government incentive that provides companies a tax credit covering up-to 25% of the associated costs of Child Care resource tools and assistance provided to employees, either directly or managed through services such as TOOTRiS’ Child Care as a Benefit. This IRS-managed program is capped at $150,000.

Despite the clear advantages providing help to working parents offers, 2020 data from the Bureau of Labor Statistics reveals that just 11% of the workforce has access to employer-provided child care help.

Benefits of the Child Tax Credit on Retail Spending & Businesses 

Grocery stores, big-box retailers and the auto business are expected to see a pick up in sales over the coming months, thanks to newly funded parent bank accounts. Walmart said it saw an increase in spending after people received stimulus checks while Best Buy stated they also observed customers spending extra money on electronics when previously receiving extra unemployment benefits.

An analysis by JPMorgan estimated that retail sales will see about 0.7% lift overall from the expanded Child Care Tax credits:

Video Overview about the Child Tax Credit program:

HealthWatch Wisconsin, a nonprofit subsidiary of ABC for Health, Inc. working to promote improved access to health care coverage and services, has created a helpful video tutorial that summarizes the new program: