Child tax credits of up to $300 per kid will start hitting parents’ bank accounts on July 15, President Joe Biden announced Monday.
Setting an initial payment date for the first time, Biden hailed the monthly cash payments as a new way to help lift millions of children out of poverty.
“Folks, this Child Tax Credit is a huge step towards a tax system that works for the middle class,” Biden tweeted on his official account.
The payments are a result of the decision to raise the child tax credit to $3,600 or $3,000 from $2,000.
Most low-income and middle-class parents of children under 6 years old will receive a monthly payment of $300 in the middle of the month, for a total of $1,800 in 2021. The remaining $1,800 can be claimed by parents on their 2021 federal income taxes.
For children from 6 to 17, the credit is $250 a month for a total of $3,000.
Like the COVID-19 relief stimulus payments, the monthly credits will be sent directly to taxpayers’ bank accounts, giving parents immediate access to the cash.
Parents making up to $112,500 a year are eligible. Anyone who has filed taxes and claimed a child on their return will automatically be enrolled in the program.
The credit is fully refundable, meaning taxpayers will receive it even if the credit is more than their total federal tax bill.
The only catch is that if the IRS sends you too big a cash payment, you will have to repay the difference come tax time next year.