More than 50,000 tri-state area families with children could begin receiving at least $300 per child beginning July 15, thanks to the newest program rolling out of the American Rescue Plan.
Some area families, though, will need to inform the IRS of changes to their situations or qualifications for the credits.
Within the massive pandemic relief act passed in March was an expansion and several changes to the existing federal Child Tax Credit. The change increased the previous $2,000 annual tax credit per child to $3,000 for children 6 to 17 years old or $3,600 for children under 6. It also increases the maximum income level before those credits are phased out from $110,000 per year to $150,000 for those filing jointly.
“The folks who have already been getting child care tax credits will see their payments expand,” said Dave Lyons, sustainable innovations consultant for Greater Dubuque Development. “Also more families will see the ability to qualify.”
Families with income over $150,000 will still receive the credit at 5 cents off every dollar above the threshold.
According to U.S. Census Bureau estimates, there are more than 66,300 children 17 years old or younger in the 10-county TH coverage area.
Even without factoring the $600 per year for the youngest children within the tax credit’s new form, that is nearly $200 million in tax credits to area families. The previous program — the Tax Cuts and Jobs Act of 2017 — would have sent more than $132 million to area families.
But, those payments per child would usually impact parents’ tax returns each year. Now, half of the credit could be received in advance. These expanded credits were designed to come in monthly installments, to help soften economic impacts from COVID-19.
Beginning July 15, families would receive $250 per month for each child 6 to 17 years old, and/or $300 per month for children under 6. The rest of the credit would impact the return.
Jason Neises, community development coordinator for the Community Foundation of Greater Dubuque, has been studying area child poverty and child care barriers. He said these payments might help some pandemic-related workforce issues as well.
“A lot of the jobs people are having trouble filling are not high-paying jobs,” he said. “They are not going to go back if it means spending half of their paycheck on child care. So, if parents have a little cushion to put toward child care or other expenses, that could make it make financial sense for them to return.”
Most parents will begin receiving these payments automatically if they filed taxes in the past two years and received the tax credits previously. But for new parents, or those who have had additional children recently, or for those whose income now qualifies them for these payments, the IRS has created a portal to update financial information. That is available here: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.
The same portal allows parents to opt out of the advanced payments, should they want to wait for the credit on their tax return.