CNBC's Ylan Mui reports on the Child Tax Credit that starts hitting bank accounts today. For access to live and exclusive video from CNBC subscribe to CNBC PRO: [ Ссылка ]
It’s a historic day for U.S. families with children.
Roughly $15 billion has been sent to 35.2 million families in the first of six advance child tax credit payments, according to the U.S. Treasury Department and IRS. The average payment in the first round is $423, and will reach nearly 60 million children, the agency said.
“For the first time in our nation’s history, American working families are receiving monthly tax relief payments to help pay for essentials like doctor’s visits, school supplies, and groceries,” said Treasury Secretary Janet Yellen in a statement. “This major middle-class tax relief and step in reducing child poverty is a remarkable economic victory for America — and also a moral one.”
The enhanced child tax credit is one of the largest anti-poverty measures seen in the U.S. since President Lyndon B Johnson’s war on poverty was launched in 1964. It’s also the first time a major tax credit has been sent in advanced payments, and on a monthly basis, according to Treasury senior administration officials.
“It is a huge deal,” said Arohi Pathak, director of policy at the Poverty to Prosperity program at the Center for American Progress. ”[The child tax credit] is a huge relief for way too many working parents and particularly during this pandemic.”
The enhanced child tax credit
The American Rescue Plan passed in March added to the existing child tax credit. For 2021, the maximum enhanced credit is $3,600 for children younger than age 6 and $3,000 for those between 6 and 17. The regular child tax credit was $2,000 for children under the age of 17.
Half of the money will be distributed as an advance on 2021 tax credits in monthly payments from July to December — the second half will be claimed when families file taxes next year. For households getting the full benefit, payments will be $300 per month for children under the age of 6 and $250 for those between the ages of 6 and 17.
There’s no limit on the number of eligible children who can receive the credit. For example, a family with three children ages 5, 8 and 10 who qualified for the full credit would get $800 per month.
The full credit is available to eligible households with adjusted gross income less than $150,000 for married couples filing jointly and $75,000 for individuals. The enhanced credit phases out for married couples filing jointly making $170,000 annually and individuals earning $95,000, though they’d still qualify for the regular child tax credit.
Families who would rather take the entire credit in a lump sum next year can do so by opting out of monthly payments through an IRS portal. So far, about 1 million households have done this, the agency said.
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