The 1.9 trillion American Rescue Plan, passed earlier this year, has made some changes to the child tax credit.
The IRS says 39 million families will receive advanced monthly payments starting on July 15. Credit amounts will increase for eligible parents to $3,600 for each child under the age of 6, and up to $3,000 for all children ages 6 through 17, according to the IRS.
The previous child tax credit maxed out at $2,000 and could only be claimed when filing income taxes.
The Center for Community Solutions estimates that 92% of Ohio’s children can benefit from the enhancements, at least in part.
“For single parents if your adjusted gross income was less than $75,000 per year you’ll receive the full amount,” said Emily Campbell, associate director of The Center for Community Solutions. “For a married couple, it’s $150,000 of adjusted gross income per year and then for single people who are heads of household, it’s in the middle of that, $112,500 are the income thresholds to receive that full tax credit.”
The IRS urges people with children to file their 2020 tax returns as soon as possible to make sure they're eligible for the appropriate amount of money.
“There’s no difficult criteria to apply, no application, no phone calls, no interviews, it’s very simple. Once the money comes to American families, those families can use it for whatever they want,” said Campbell.
Campbell says the monthly payments would allow families to plan.
“We saw during the pandemic that almost 75% of Ohioans used at least some of their extra stimulus dollars for food. We know in communities like Columbus that has a higher child poverty rate than the state, that these payments can make a huge difference in the lives of individual families and children, as well as whole communities.”
Families could opt out of the advanced payments, the IRS says steps to do that will be announced at a later time, but for those that accept the money, they still will receive some credit when they file their taxes next year.
“For the last six months of 2021 people will be receiving these monthly payments. Then when they file their taxes next spring, they will get the rest of the amount for 2021,” said Campbell. “It’s important to note that these enhancements are only in place for this year, so for those payments to continue past December Congress needs to act.”