WASHINGTON — The IRS on Thursday began sending out the first installment of the advanced child tax credit, including millions of payments to California households.
Qualified families are now eligible to receive a monthly payment of up to $300 for each child under the age of 6, and $250 for every child ages 6 to 17 for the remainder of the year, with more coming in 2022. Those who receive the payment by direct deposit should expect to see a company name of “IRS TREAS 310” and description of “CHILDCTC.”
In the Golden State, over 7.8 million children 17 years old or younger are expected to benefit from expanded tax credits, according to the Center on Budget and Policy Priorities.
“It’s definitely a big deal,” Katie Dumindin, a San Diego mother of three, told FOX 5. “Nine hundred dollars goes towards lessons and practices for the kids.”
For other parents, it may make all the difference in whether they can survive financially.
“Our birth rate across the country is the lowest it’s been in a hundred years,” said Dan Roccato, a finance professor at University of San Diego. “The birth rate now is 1.64%. It should be 2.1% just to replace our population.”
Previously, an estimated 3.5 million children in California were left out of the full payment, which used to max out at $2,000 per child per year, the center reported.
The child tax credit increased to an annual amount of up to $3,600 per child under the $1.9 trillion COVID-19 relief package that was passed back in March. And unlike in years past, families will receive the payment even if they didn’t earn enough money to owe income tax, making more children eligible for the benefit.
“Today is a historic day for working families in California and across the country. Expanded Child Tax Credit payments will be hitting bank accounts of millions of working families, delivering one of the most significant reductions in child poverty in our nation’s history,” Sen. Alex Padilla, D-Calif., said in a statement Thursday.
An analysis by Columbia University’s Center on Poverty and Social Policy found that the tax credit and other initiatives in the American Rescue Plan could cut child poverty by at least half.
The legislation will help lift about 500,000 children in California above the poverty line, according to Padilla.
Starting Thursday, eligible households will receive the child tax credit in a monthly check or deposit, unless they already chose a lump-sum option or plan to unenroll and receive the rest of the payment all at once.
Roccato says that’s an option some may want to seriously consider.
“Some may want to think twice about the monthly deposits,” he said. “If your income changed substantially — went up or you had a big investment — you may have to pay some of that back when you do taxes in 2022.”
Most Americans won’t need to take any additional steps to receive the payment, provided they filed their 2019 or 2020 tax return, or — if they normally don’t file taxes — signed up to receive a stimulus check through the IRS’s non-filer tool.
The Child Tax Credit Non-filer Sign-up Tool can still be used to sign up to receive the expanded benefit.