Thousands of Bartholomew County families are expected to start receiving the first of six monthly payments of up to $300 per child on Thursday as part of an expanded tax credit that is projected to cut U.S. child poverty in half.
The payments are part of President Joe Biden’s $1.9 trillion coronavirus rescue package, which temporarily increased the child tax credit for one year and made it possible for the Treasury Department to pre-pay half of the benefits on a monthly basis starting this week, The Associated press reported.
Couples earning $150,000 or less, or single parents that make up to $112,500, can receive full payments on the 15th of every month through the rest of the year, in most cases by direct deposit, according to the White House.
Recipients can get up to half of their annual child tax credit paid up front before they file taxes next year, which amounts to $1,800 in advance for each child under age 6, generally paid in six monthly installments of $300 through December, according to the Internal Revenue Service. For children age 6 to 17, recipients can get up to $1,500 in advance in six monthly payments of $250.
Overall, the benefits total up to $3,600 annually for children under age 6 and $3,000 for children ages 6 to 17. The remaining six months of benefits would then be paid to recipients after they file their taxes next year. Previously, the child tax credit was capped at $2,000 for any child younger than 17 and paid to families with income tax obligations after they filed with the IRS, according to wire reports
Currently, it unclear exactly how many Bartholomew County families would qualify for the expanded credits, though child and other dependent tax credits were claimed on nearly 10,000 local tax returns in 2018, according to the most recent data from the Internal Revenue Service.
Local non-profits say the expanded child tax credits will help numerous families in the Columbus area who are struggling to make ends meet.
For instance, financial coaches at United Way of Bartholomew County are working with more than 200 people in the community to help them “leverage these monthly payments to become more financially stable,” said Mark Stewart, president of United Way of Bartholomew County.
“A third of families in our community live below the federal poverty line or are working and do not make enough to take care of their basic needs,” Stewart said in a statement. “These monthly payments will help ensure more of our families have their critical needs such as child care, groceries and transportation met.”
Kelly Daugherty, executive director of Love Chapel, a local food pantry, said he expects the expanded credits to have a positive impact on food insecurity.
“I think it’s definitely going to be something that’s positive,” Daugherty said. “It’s expensive to raise kids, there’s no doubt about it. And the cost of food when you have children is just unbelievable. So the fact that the folks that have the children are going to be getting that extra income is going to help tremendously.”
The expanded tax credits aim to reduce child poverty, provide support to families affected by the pandemic and parents forced to cut down on work or give up jobs to take care of children after losing access to child care, according to the AP.
In Bartholomew County, an estimated 21% to 25% of children lived below the poverty line in 2019, according to the U.S. Census Bureau. In 2018, nearly 1 in 6 local children were food insecure, according to Feeding America, a nationwide association of 200 food banks and 60,000 food pantries.
For its part, the IRS will determine eligibility based on the 2019 and 2020 tax years, but people will be able to update their status online. People may register for the program even if they did not file their taxes.
The Biden administration has launched the website childtaxcredit.gov with details for potential recipients.
The program will expire after one year, though Biden has proposed extending it through 2025 with the ultimate goal of making it permanent, according to wire reports. The expanded credits could cost roughly $100 billion a year.
Republicans have criticized the initiative as an expansion of the welfare state that removes the incentive for parents to seek work, according to wire reports. They are expressing concern about fraud in the program and asking what the IRS will do to crack down on improper payments.
— The Associated Press contributed to this report.
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Visit childtaxcredit.gov or www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021 for more information about the expanded child tax credits.