Biden will start sending monthly checks of up to $300 to 39 million families with children under the age of 16 from July 15 under expanded tax credit
Expanded monthly child tax credits will start going out to 39 million U.S. families starting July 15, the President Joe Biden and the Treasury Department announced Monday.
'We need to give ordinary families a break – a tax break – to help them with the cost of raising their kids,' Biden said during remarks from the White House on Monday. 'Most people don't know it, but for families with children we put that tax cut into the American Rescue Plan.'
'90% of the families, all middle class and working class families, will get this tax cut. It's a one-year cut that reduces your taxes… for each child you have under the age of 18,' he added.
Usually, tax breaks for Americans with kids and dependents come one time a year – at tax times. The latest COVID-19 relief package, however, creates monthly payments to better help distribute these funds throughout the year.
Joe Biden announced Monday his Treasury Department will start sending monthly child tax credits to 39 million families on July 15
'We need to give ordinary families a break – a tax break – to help them with the cost of raising their kids,' Biden said during remarks from the White House on Monday
'Today is Tax Day,' Biden said. 'No one likes to pay taxes, I know. What my dad used to say is it's a small price to pay to live in this country.'
Qualified families – couples making under $150,000 – will receive a payment of up to $300 per month for each child under 6 and up to $250 per month for children between the ages of 6 and 17. This means annual benefits for parents making the least could reach between $3,000 and 3,600 per kid depending on their age.
The child tax credit was previously capped at $2,000 and only paid out to families with income tax obligations after they filed with the IRS.
The payments for millions of American families are part of President Joe Biden's $1.9 trillion coronavirus relief package, which he signed in mid-March and will go into effect this summer.
The plan, in part, extended the child tax credit for one year in the midst of the coronavirus pandemic. It also made it possible for the Treasury Department to pre-pay the benefits to families on a monthly basis.
The American Rescue Plan, signed by Biden in March, allows child tax credits of up to $3,600 per year to be distributed in monthly payments instead of annually for each child of couples earning under $150,000
'The American Rescue Plan is delivering critical tax relief to middle class and hard-pressed working families with children,' the White House wrote in a statement on the news Monday. 'With today's announcement, about 90% of families with children will get this new tax relief automatically, starting in July.'
More than 65 million children nationwide – nearly 88 per cent of Americans under 17 – are set to receive the benefits without their parents needing to take any additional action.
This year, couples earning $150,000 or less can receive the full payments on the 15th of each month, in most cases by direct deposit, but some by paper check or debit cards. The highest benefits total $3,600 annually for children under 6 and $3,000 for those who are older.
The benefits diminish for individuals whose adjusted gross income is more than $75,000 or couples earning more than $150,000 – and the highest-income parents will receive none at all.
The IRS will determine eligibility based on the 2019 and 2020 tax years, but people will also be able to update their status through an online portal. The administration is also setting up another online portal for non-filers who might be eligible for the child tax credit.
The president has proposed an extension of the increased child tax credit through 2025 as part of his $1.8 trillion families plan. Outside analysts estimate that the payments could essentially halve child poverty.
The expanded credits could cost roughly $100 billion a year.
Under the $1.9 trillion American Rescue Plan, Biden expanded child tax benefits for another year in the midst of the pandemic. Couples earning less than $150,000 can earn each month up to $300 per child 6 and under and $250 per child 6-17
The White House pressed in its Monday statement for Congress to continue working toward passing Biden's costly American Families Plan, which is essentially a massive expansion of the welfare system and social programs.
'While the American Rescue Plan provides for this vital tax relief to hard working families for this year, Congress must pass the American Families Plan to ensure that working families will be able to count on this relief for years to come,' the statement reads. 'For working families with children, this tax cut sends a clear message: help is here.'
Democrats are lauding the extension and pushing for the welfare state to be expanded by making the child tax credit permanent – and not just a benefit offered through the pandemic.
House Speaker Nancy Pelosi and other top Democrats launched the offensive immediately after the Treasury Department announced Monday that the first round of payments starting in July.
'We must make this lifeline permanent,' Pelosi said.
Ways and Means Committee Chairman Richard Neal said: 'Now that nearly 90% of our nation's children will benefit from this critical lifeline, we must make this change permanent. Millions of families are counting on us, and the Ways and Means Committee stands ready to make it happen.'
According to estimates from the Tax Foundation think tank, making the child tax credit permanent would cost taxpayers $1.6 trillion over 10 years.
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