What's the advance child tax credit?

Early Care for Every Kid

In this episode of early care for every kid, we discuss:

• (01:30) what is the expanded/advance child tax credit
• (02:40) how to claim the child tax credit (even if non-filer)
• (03:01) how much will your family receive when
• (04:18) who is eligible to receive the child tax credit
• (05:06) how to claim the child tax credit (even if $0 income)
• (07:00) when and how much
• (07:42) why you might want to unenroll from the monthly payments
• (08:43) immediate benefits of the child tax credits for businesses and families
• (10:34) to be sure, naysayers may say...
• (11:34) what I say
• (13:14) benefits vs costs of the child tax credit
• (15:00) how to make this a permanent fixture
• (15:42) how to be a good neighbor

Mentioned in this episode:

• Advance Child Tax Credit Payments in 2021 (Manage Payments | Non-Filers | Check Eligibility) https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021
• American Rescue Plan https://www.whitehouse.gov/american-rescue-plan/
• Research from the Center on Budget and Policy Priorities https://www.cbpp.org/research/federal-tax/house-covid-relief-bill-includes-critical-expansions-of-child-tax-credit-and

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AI-generated transcript below. Please excuse any typos or errors.

Danielle An

(00:00)

If you're a parent like me, you may have received an actual hard copy letter in the mail recently about the Advanced Child Tax Credit payments that will begin this week. I can't believe I'm saying this, but I'm excited to talk about updates from the IRS. The Advanced Child Tax credit and the payment schedule, what it is, who's eligible, and how much you can expect to receive.

It's all coming up in this episode of early care for every kid.

This is early care for every kid, a podcast for people who want to make learning, living, and loving more harmonious for everyone. I'm your host, Danielle An. Each week, I interview fellow parents, educators, advocates, and community leaders who care for and work with young children and families. I share their experiences, insights, and specific, actionable tips on how you could help make the world work better for everyone. Welcome to our conversation.

(01:30)

Beginning this week, the IRS will start making Advanced Child Tax Credit payments to eligible households in monthly payments. I'll go over what the advanced child tax credit is, who is eligible to receive this payment, what you have to do to claim this, when and how you can expect to receive how much, and finally, some thoughts on this.

(02:40)

1. First, what is the advanced child tax credit? Generally a child tax credit is a credit allowed for a percentage of work-related expenses to care for dependents a taxpayer would incur to work or to look for work, like childcare costs, before or after school care costs.

Typically tax credit is available only when you file your taxes. But this year 2021, the IRS is making early monthly payments, hence the name advance child tax credit, starting this Thursday, July 15th. Under President Joe Biden's American Rescue Plan signed into law in March of this year, 2021, a big change or expansion is that even non taxpayers, any parents with dependents, including people who have not filed taxes can get the payment.

One caveat for non tax filers, though, if you haven't filed taxes this year, or in recent years, for whatever reason, to be paid the child tax credit, you'd have to go to the IRS portal to submit basic info. Like your full name, current address, date of birth, social security number for you, your spouse, your dependents, bank account info, et cetera.

I'm including the link in the show notes.

(03:01)

Now, how much is this payment for your family?

Parents with an income of less than $150,000, if you're married and filing jointly, will get a max of $300 for each kid under the age of 6 and $250 for each kid ages 6 to 17 in monthly advanced payments.

If you have dependents aged 5 years old or younger, including newborns, payment amount will be up to $300 a month for each kid. That translates to $3,600 total per kid.

If you have dependents aged 6 through 17 years old, payment amount will be up to $250 per month per kid, or $3,000 total.

For example, if you have two kids in that age range from six to 17 years old, it would be up to $500 a month, starting this July through the end of the year.

The other half of the money will be part of your tax refund in 2022 when you file your 2021 taxes next year.

Families with higher incomes or with older dependents will get smaller payments.

(04:18)

2. So who is eligible to receive the advanced child tax credit?

The short answer is if you filed your 2020 taxes with the IRS , you don't have to take any additional action to receive the advanced child tax credit. Half of the total amount will be deposited into your bank account by direct deposit every month from July through December, over a six months.

The other half of the total amount will be paid when you file your 2021 taxes next year.

If you have not, or were not required to file taxes this year, or in recent years, you can still start accessing this money.

You just need to go to the child tax credit update portal on the IRS website and submit some info. I want to say this again.

(05:06)

Even if you typically don't file taxes, even if you had $0 in earned income, you can receive advanced child tax credit payments if eligible.

So again, who is eligible? In general, qualified children must live with the taxpayer or the tax filer in the United States for more than half the year.

I'm going to read this part directly from the IRS site, most recently updated June 14th, 2021:

You qualify for advanced child tax credit payments. If you have a qualifying child. Also you or your spouse, if married, filing a joint return, must have your main home in one of the 50 States or the District of Columbia for more than half the year. Your main home can be any location where you regularly live.

Your main home may be your house, apartment, mobile, home shelter, temporary lodging, or other location, and doesn't need to be the same physical location throughout the taxable year. You don't need a permanent address to get these payments. If you are temporarily away from your main home because of illness, education, business, vacation, or military service, you are generally treated as living in your main home.

So if you've lived in the United States for more than half of the year for 2021, and you have a qualifying child that is your dependent under the age of 18, then I believe you are eligible. Even if you have zero earned income.

But you must submit your information on the IRS sites portal. And the link will be in the show notes.

(07:00)

3. So. When and how you can expect to receive how much?

If your family is expecting to receive $3,000 total, six monthly payments of half of that amount, so 1500, would be made between July 15, this Thursday, through December 2021 over six months. Then when you file your taxes next year in 2022, your family would receive the other half, or 1500, as the seventh payment.

This monthly payment is intended to help immediately for dealing with monthly bills or expenses.

(07:42)

If you'd rather receive a lump sum next year when you file taxes in 2022, families have the option to unenroll or opt out anytime this year from the monthly payment of the child tax credit.

Now, why would anyone want to unenroll from this monthly payment, besides maybe just wanting a lump sum payment?

I'm not a tax expert, but if you anticipate any changes in your household's financial circumstances this year? Like moving up an income bracket or your dependents age out of an age bracket, say from five years old to six years old or 17 to 18, or if there's a change in custody. In these cases, you may want to unenroll from the monthly payment to a lump sum next year, but you should look into the IRS portal to get more specific answers. Again, I'm not an expert. I'm just sharing my research.

(08:43)

4. Some thoughts

So why am I excited about this? All this could be a lifeline for families and for businesses who could really use increased spending. We are seeing signs of our economy bouncing back. With summer camps and schools mandated to open back up in the fall.

But so many parents, especially women, left the labor force and have yet to rejoin the workforce due to lack of reliable childcare options during and after COVID. And according to the latest US Census Survey in May, a third of all adults with children are struggling to pay their usual expenses like food, rent, healthcare, and transportation.

One in eight adults living with children report their household doesn't have enough food to eat. One in five renters living with children reported they're not caught up on rent. Black and brown families and women, women of color are disproportionately feeling the strain of the pandemic. And research shows that financial hardship has long-term consequences for the healthy development of children.

We can get into this more in a separate episode, but research also shows that putting money directly into families is the most impactful way of reducing child poverty. Often families will struggle to make ends meet and have to take on expensive debt with high interest. A monthly allowance boosts a family's income and helps pay for the cost of diapers, food, formula, healthcare, childcare, clothing, and housing, according to their shifting needs.

(10:34)

Now a taxpayer without any dependents may feel like this kind of child tax credit, especially an expanded one, is unfair since public funds are going towards a specific population: families with dependents. I get how it may seem like it's unfair to direct public funds to address a need that's unique to one population like families with children.

Great for people who make under $150,000 with multiple children. But not so great for those without dependents or for those who earn well beyond the $150,000 threshold who don't need this kind of tax credit.

If we chose to have children, shouldn't we figure out any work-related expenses, including childcare costs, how to house clothe and feed our own kids?

(11:34)

But I want to respond to that line of argument or questioning, not with some moral argument like it's good to help others in need, but with an observation.

Even if we're not avid library users or public park users or subway or bus or train users or a commuter that needs to cross the Brooklyn Bridge daily. Having these public services or infrastructure in place helps our communities learn, grow, and connect more efficiently and effectively.

We can't always pinpoint what exactly contributed to new research or development or inventions or collaborations that advance our quality of life collectively. But without having basic needs met, like getting from one place to another or not being hungry or cold or safe, individuals can't thrive and communities can thrive.

It's only when we elevate the quality of life for everyone, at least to a basic livable, dignified level that we can all flourish and live creatively, or even just function?

Besides how do you not care about others at all? I just don't know. Even if their needs have nothing to do with my quality of life.

(13:14)

In any case, the benefits of the tax credit are supposed to far outweigh the costs.

Since child poverty costs the US between $800 billion to 1.1 trillion annually.

But thanks to the expanded child tax credit, about 4.1 million more children under 18 will be lifted out of poverty according to research.

(15:00)

5. What to do

Currently the child tax credit expansions apply for this year only. According to the American Family's Plan, President Biden would like to extend this into 2025. And there is a movement in Congress to make this tax break permanent, to help families among Democrats.

But it would help more families and children if it eliminated the requirement for a social security number. Because many who might actually really need this kind of child tax credit may not apply due to the families immigration status. Or for people without stable housing or a bank account.

But it would help more families and children who might need it the most if it eliminated or tweaked the requirements for a social security number, a home address, or a bank account. Many who might actually really need this kind of child tax credit may not apply out of fear for the families or relatives immigration status or due to housing insecurity or lack of access to a bank account.

In any case as expected, this movement is meeting resistance from Republicans who argue that this kind of child tax allowance encourages reliance on welfare and anti work attitude.

I think it's quite obvious that this is a helpful tax credit that will immediately give a big boost to our economy and families with children . And one that has merit to be made permanent. It will need some tweaks, a lot of support, activation and noise from constituents to the representatives to make it a meaningful fixture against resistance.

To sum this episode up. If you've filed taxes already, you don't need to take any action to receive the advanced child tax credit. If you haven't filed anything, you're still eligible if you live in the US for more than half of 2021, and have a child who will be under the age of 18, by the end of 2021.

Check out the IRS portal, linked in the show notes to check your eligibility for the payments, submit your info or opt out of receiving monthly payments. And instead to receive a lump sum next year, when you file taxes.

(15:42)

Finally, if there's anyone in your community who may not be aware of the expanded eligibility, especially those who may not have filed taxes in the past, who may not be familiar with filing taxes or the interface, this could be helpful information to share. If you're listening to this podcast and know someone who might need help submitting their information on the IRS portal to be able to receive payments, please let's be a good neighbor.

Thanks for joining me Danielle An for this episode of early care for every kid. I hope this clarified some questions you may have had, but didn't have time to look into. You can find the resources mentioned at early care for every kid.org/five. And connect with me on Instagram at early care for every kid.

If you haven't already, go ahead and hit the follow button wherever you're listening to subscribe to the podcast. Till next time, take care.