Phyllis Kimber Wilcox |
In 2019, many low income families were among those who missed out on or had delays in receiving stimulus checks and or child tax credits because their income was too low to require them to file taxes with the IRS.
It is important that these families file with the IRS even if they have no income because they may be entitled to a refund and/or child tax credit. Follow this link to get information on how to sign up.
In the meantime, this week the IRS sent notification letters to families eligible to participate in the American Families Plan’s expanded child tax credit and the funds began appearing in the bank accounts of many families eligible to receive it.
The American Families Plan was signed into law by President Joe Biden in June. It is designed to provide relief in the form of monthly payments to working families who are still struggling in the wake of the Coronavirus pandemic.
According to Biden, in the past more than twenty six million children did not receive the full child tax credit—this included half of all Black and Latinx children. It is estimated by the White House that five million children will be lifted out of poverty by the President’s Plan.
How One Family Plans to Use the Extra Income
Terrence (a pseudonym) spoke about what the extended child tax credit would mean to him and his family. Terrance and his wife have three young children, a five-year-old and two in their early teens. He and his wife both work full time–Terrance works two jobs– to make ends meet.
Explaining his thoughts about whether and how the added income will help his family budget. “Definitely, definitely [it will help],” Terrance replied. “I see it as a positive. Our plans are to take care of some of our debt with it.” He continued, “People should look at it for what it is, it’s not a lot but it can help you do some things with it financially.”
Terrance also believes the program should be continued beyond 2021. “I want them to continue it, Covid messed up alot of things economically and anything they (the government) can do would help.” The American Families Plan extended child tax credit is due to expire unless Congress votes to extend it.
The IRS says it sent fifteen billion dollars in payments to the families of sixty million children.
2021 Child Tax Credit vs 2019 Version
There are some differences in the structure of the 2021 expanded tax credit that allows thirty six hundred dollars per child under the age of six, and three thousand dollars per child for children ages six to seventeen as compared to the 2019 credit whose maximum benefit was two thousand dollars per child, seventeen years of age and younger.
The 2021 enhancement also makes the total amount of the tax credit for each child fully refundable and is issuing half of the credit in monthly payments even if parents have no income. By comparison, the 2019 version of the child tax credit did not provide for monthly payments.
The 2021 version of the credit gets smaller for those making seventy five thousand dollars per year for individuals, one hundred and twelve thousand dollars per year for heads of household, and one hundred fifty thousand dollars per year for married couples. It also begins to phase out for individuals who make two hundred thousand dollars per year and couples who make four hundred thousand dollars per year. The 2019 child tax credit had the same reduction and phase- out income limits..
Beginning in July, people with children ages six to seventeen years of age will receive monthly advances on their child tax credit from the federal government. Children six to seventeen years old can receive up to two hundred and fifty dollars per child and three hundred dollars per month per child under five years old. If you filed your taxes in 2019 and 2020 the payments are directly deposited into your account. Others will receive payments in the form of checks and debit cards mailed to your address.
Who is Qualified to Receive the Credit
According to the IRS website to qualify for advance Child Tax Credit payments, you — and your spouse, if you filed a joint return — must have:
Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return; or
Given us your information in 2020 to receive the Economic Impact Payment using the Non-Filers: Enter Payment Info Here tool; and
A main home in the United States for more than half the year (the 50 states and the District of Columbia) or file a joint return with a spouse who has a main home in the United States for more than half the year; and
A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number; and
Made less than certain income limits
If you believe you are entitled to this year’s expanded child tax credit but have not received a letter from the IRS you can follow this link to the website to check the status of your enrollment in the program.
California also has a plan to help working families with young children called the Young Child Tax Credit. For more information regarding this program follow the link here.
Phyllis Kimber-Wilcox is a reporter for Black Voice News. Her interests are the intersections of historic events with contemporary realities and their impacts on the persistent social, structural and economic barriers which continue to adversely affect and limit Black lives with an eye toward community-based solutions.