WASHINGTON - Some 39 million U.S. families with children are set to begin receiving monthly payments in July as part of the expanded child tax credit, the Treasury Department announced Monday.
Starting on July 15, qualified families will receive a payment of up to $300 per month for each child under 6 and up to $250 per month for children between the ages of 6 and 17.
The payments are part of President Joe Biden's $1.9 trillion COVID-19 relief package, called the American Rescue Plan Act, which expanded the child tax credit for one year. It also made it possible to pre-pay the benefits on a monthly basis — rather than through tax refunds.
The child tax credit was previously capped at $2,000 and only paid out to families with income tax obligations after they filed with the IRS.
But for this year, couples earning $150,000 or less can receive the full payments on the 15th of each month — in most cases by direct deposit — helping to allow families to "plan their budgets around receipt of the benefit," the IRS said in a statement. The payments could come a day earlier or later if the 15th falls on a weekend or holiday.
A mother and child wearing face masks walk during the coronavirus pandemic on May 24, 2020 in New York City. (Photo by Ben Gabbe/Getty Images)
Nearly 88% of children are set to receive the benefits without their parents needing to take any additional action.
"While most taxpayers will not be required to take any action to receive their payments, Treasury and the IRS will continue outreach efforts with partner organizations over the coming months to make more families aware of their eligibility," the IRS statement said, which coincided with the deadline for Americans to file their 2020 tax returns.
The benefits total $3,600 annually for children under 6 and $3,000 for those who are older. The IRS will determine eligibility based on the 2019 and 2020 tax years, but people will also be able to update their status through an online portal.
The Biden administration is also setting up another online portal for non-filers who might be eligible for the child tax credit.
The president has proposed an extension of the increased child tax credit through 2025 as part of his $1.8 trillion American Families Plan, while making the credit permanently fully refundable. Outside analysts estimate that the payments could essentially halve child poverty.
The expanded credits could cost roughly $100 billion a year.
"While the American Rescue Plan provides for this vital tax relief to hard-working families for this year, Congress must pass the American Families Plan to ensure that working families will be able to count on this relief for years to come," Biden said in a statement.
"For working families with children, this tax cut sends a clear message: help is here," he added.
This story was reported from Cincinnati. The Associated Press contributed.