While the additional money may be very helpful for some families across the economic spectrum, the overall tax credit situation is complicated.
The tax credit payments are advance payments from the Internal Revenue Service — so depending on a family’s tax situation, income, and other factors, their tax refund next year may be smaller than anticipated, or taxes owed may be higher than expected.
The payments are going to some 35 million American families, like that of Crystal Di Filippo, and her elementary school-aged son.
“It helps with the cost of food, clothing,” the restaurant worker from Howard Beach, Queens said in an interview. “Anything helps.”
A full payment is $3,600 per child under the age of 6. Those payments are made in $300 per-month increments, in the middle of every month, through December.
That’s only half of the payment amount, however. The other half will be paid out next year.
It’s a similar case for families with children ages 6 through 17. A payment of $3,000 is being made to them, made in $250 per-month increments through December, with the other half made in 2022.
Individuals making $75,000 or less qualify for full payments, and so do couples making $150,000 or less.
Payments will be sent in smaller amounts, on a sliding scale, to families with higher incomes — up to $240,000 for unmarried taxpayers, and up to $440,000 for married couples.
As Sophie Collyer, the research director at the Center on Poverty and Social Policy at Columbia University’s School of Social Work pointed out, “It’s important to emphasize that the overwhelming majority of children and families in the United States are going to be receiving this credit.”
Plus, economists and officials hope the payments will help inject more money into the economy.
“We find that alone, the expanded child tax credit could reduce the rate of child poverty by more than 40%,” Collyer said.