“It does great things for families who have had to struggle with Covid, so many families have had to struggle,” Schumer said, noting that the enhanced credit is expected to lift many children out of poverty. “This is going to help.”
His remarks came during a press conference at an IRS office in New York City — where people can get help applying for the credit on Saturday — with Reps. Alexandria Ocasio-Cortez and Jerry Nadler, both Democrats of New York, aimed at informing people about the child tax credit.
Reaching out to low-income families
The agency selected these locations based on data that found that many children who live in them do not show up in IRS records.
Most families don’t have to do anything to get the enhanced payments since the IRS already has their 2020 or 2019 returns showing they claimed the regular child tax credit, which was $2,000 for each child up to age 17. Roughly 39 million households, covering 88% of children, will start receiving the monthly payments automatically.
But those who haven’t filed their returns or given the agency their information to receive the stimulus checks must take action to get the payments. Exactly how many children are in these families isn’t known, but it’s estimated to be around 5 million.
A beefed-up child tax credit
Eligible parents will get $300 a month for each child under age 6 and $250 for each one ages 6 to 17. The monthly payments begin July 15 and run through the end of the year.
The expanded credit, however, is only in place for 2021.
The Democrats’ American Rescue Plan beefed up the existing child tax credit, giving families up to $3,600 for each child under 6 and $3,000 for each one under age 18. The full enhanced credit will be available for single taxpayers with annual incomes up to $75,000, heads of households earning $112,500 and joint filers making up to $150,000 a year, after which it begins to phase out.
The relief package also makes the tax credit fully refundable so that more low-income parents can take advantage of it. It had been only partially refundable — leaving roughly 23 million children unable to get the full credit because their families’ incomes are too low.
Lawmakers also wanted to make it easier for parents to use the funds to cover their expenses during the year so they are providing half of the enhanced credit in monthly payments in 2021. Families can claim the rest at tax time next year.
Extending enhanced credit beyond 2021
Democrats in Congress have been pushing the Biden administration to make the beefed-up credit permanent, but Biden’s American Families Plan would only continue the increased payments through 2025. The plan would make the credit fully refundable permanently.
“One of our goals in the upcoming Build Back Better plan is to extend this way beyond December 31. Many of us would like to make this permanent, but we’re going to extend it. It will be extended for sure, for a very a significant amount of time, and we will see if we will get the permanence we are fighting for,” Schumer said. “So this is very, very important for everybody.”
The measure is projected to cost roughly $110 billion a year.