U.S. makes it easier to enroll in expanded child tax credit; advocates call for permanent increase

A new federal web page will make it possible for more people to sign up for a federal child tax credit that will pay families who qualify up to $300 a month per child starting in July.

The American Rescue Plan Act (ARPA) temporarily increased the amount of the tax credit for 2021, to $3,600 for children under 6 and $3,000 for children ages 6 to 17. The tax credit is normally $2,000 per child.

A family with children and with an income of up to $150,000 for a couple or $112,500 for a single taxpayer qualifies for the full tax credit.

The tax credit is usually awarded when families file their federal income tax returns. It is refundable, meaning that a qualifying taxpayer whose overall tax bill is less than the total value of the tax credit receives a check for the remainder of the credit amount after filing a return.

Nationally, the tax credit increase will lift about 4.1 million children above the federal poverty guidelines, reducing child poverty by about 40%, according to the Center for Budget and Policy Priorities.

In another temporary change, the federal government will be paying up to half of the tax credit to recipients in advance starting in July, when qualifying families will receive the credit in monthly installments directly deposited to their bank accounts. The advance payments are scheduled to continue through the rest of 2021.

Families who have filed a tax return in 2019 or 2020 will receive the monthly payment automatically. For families who haven’t filed, including those who don’t file because their incomes are too low to require a tax return, the IRS has established a web portal to sign up in order to receive the monthly payment: The child tax credit non-filer sign-up tool.

According to the Wisconsin Budget Project and Kids Forward, a policy organization that advocates for children and families, more than 1.1 children in Wisconsin live in households that will qualify for monthly payments.

“The improvements to the child credit made by the American Rescue Plan Act will make a significant difference for families and kids by making it easier to afford housing, food, clothing, child care and health care,” stated Wisconsin Budget Project analyst Tamarine Cornelius.

The larger tax credit and advance payments are only in effect for 2021. In a statement issued Monday, Kids Forward urged the adoption of legislation to make the changes permanent — a proposal that  is included the Biden administration’s American Families Plan.

Additional information from the IRS about the Child Tax Credit revisions is found here and here.