Monday Is Tax Day. Here’s How To Get The Child Tax Credit.
Families that want to take advantage of the expanded child tax credit must file their taxes by the end of Monday. That’s because the income tax deadline was extended from April 15 to May 17.
Under the American Rescue Plan, a $3,600 credit is available for every child under six, and $3,000 for children from six to 17. Full-time college students under 25 can also qualify for up to $500. The money is dispersed in monthly payments of up to $300 per child.
“So just imagine if you have three kids, including the two young ones and the older one, I mean, you'll get $10,000,” U.S. Rep. Tom Suozzi (D-NY) said. “I mean, that'll be life changing for families.”
The payments are available for a single parent making up to $75,000 or joint filers making up to $150,000 per year. The credit phases out by $50 for every $1,000 of income over the $75,000 for individual filers and $150,000 for joint filers. The credit zeros-out for single filers who earn $240,000 and married filers with $440,000 or more.
Dominic Leppla of New Haven knows he is far from poverty. President Joe Biden signed the plan with the child tax credit to lift half of the nation’s children out of poverty.
As an adjunct professor at Quinnipiac University, Leppla and his wife, Polina, moved to the area to take advantage of several opportunities five years ago before deciding to start a family. His wife is a postdoctoral researcher at Yale and has been studying the coronavirus.
“I think one of the things that unites a lot of people of my age — older Millennials — is the difficulty of trying to take advantage of opportunities, which can produce more uncertainty and makes it harder to settle down,” Leppla said. “And the feeling that we would like to have those kinds of certainties that let’s say our parents have.”
Leppla said the child tax credit has helped opportunity-seekers like his family, especially with a 3-year-old daughter going from school and aftercare to full-time daycare so her parents can work.
“We started scrambling, trying to figure out how we’re going to pay for certain things and plan for certain things,” he said. “[The credit] gave us an amazing opportunity.”
The money has already been a big deal for parents who filed early, like Jessica Soba Davila, of Bridgeport, and her 3-year-old daughter.
“I found myself with a lot of financial stress when it came to my personal bills, my rent, my car payment, and it was a little bit difficult trying to get childcare throughout the whole COVID situation,” she said. “So having to find somebody else to watch my child, it was twice as much as what I would normally pay on a regular basis."
Davila, who works a corporate job at the community action group Alliance for Community Empowerment, said the money has helped her family get their lives back.
“With the child tax credit, I was able to pay off my car. I was able to catch up on my light bill. I was able to ensure my rent was paid on time,” Davila said. “And I couldn’t be more grateful… in the long run, it’s a blessing.”
When is the money coming?
The next payment for the child tax credit is expected to go out in July with additional monthly payments through the end of the year, according to the Internal Revenue Service. A larger lump sum might be dispersed in April 2022.
Rep. Jim Himes (D-CT) said the money has no strings attached.
“You may think to yourself 'I didn't make enough money to have to file a tax return.' This child tax credit is what's known as fully refundable,” he said. “That means that if you don't owe any taxes, you nonetheless will get paid the value of the child tax credit."
What happens if I miss the deadline?
If a 2020 return has not been filed, the IRS will rely on the 2019 return. But that information won’t include any pandemic-related financial distress.
The IRS plans to launch an online portal by July 1, but won’t have the resources to build this until after tax filing season ends. Users might eventually be able to update their information if their lives have changed.
What impact would the child tax credit have?
Rep. Rosa DeLauro (D-CT) has championed for this money to help families for nearly two decades. DeLauro, the chair of the U.S. House Appropriations Committee, said it became a priority during the pandemic when negotiating for the American Rescue Fund.
“It is historic. It’s transformative. It is a lifeline for the middle class. It cuts child poverty in half [nationwide],” she said, “and we are fighting to make it permanent.”
Biden wants to make the higher payments last until at least 2025.
DeLauro said 110,000 children, or 76% of children in her congressional district, will benefit from the checks. She said over 10,000 children there will be lifted out of poverty.
In New York, the tax credit will benefit over 3.4 million children, where 440,000 live on Long Island. Rep. Kathleen Rice (D-NY) said the credit will not affect a family’s ability to qualify for or receive Medicaid, food stamps, cash assistance, Social Security income, or any other public benefit.
“It cannot be understated how huge this relief is for families,” Rice said. “It is money going directly into individual families pockets to put food on the table and to pay their bills.”
Who does the tax credit benefit?