U.S. Rep. Danny Davis (7th) is urging parents who are eligible to sign up for the federal child tax credit for low-income families. Most parents and guardians received their first monthly payments on July 15.
The child tax credit expansion is part of the most recent federal stimulus package, the American Rescue Plan. The act increases the child tax credit for the 2021 tax year from $2,000 to $3,000 per child for children over the age of 6, and from $2,000 to $3,600 for children under the age of 6.
The legislation also raised the maximum age for a child who can be claimed as a dependent for tax credit purposes from 16 to 17. And instead of having taxpayers wait until they file taxes to get the credit, the federal government is sending monthly payments to cover the amount of money they would save.
On July 15, the day the first monthly payments were scheduled to arrive, Davis held a press conference at East Garfield Park’s 5 Star Child Care Development Center, 2811 W. 5th Ave.
He said that, while the tax credit expansion is currently scheduled to expire next year, he is pushing to make it permanent. Daycare professionals at the conference said that the tax credit is already making a difference for the families they serve and for their own employees.
Any parent or guardian who earns up to $112,500 if they are filing as individuals or $150,000 if they are filing jointly is eligible, as long as they have dependents who are under 17 years old. They will get paid $250 a month per child for every child aged 6 to 17 and $300 per child for children under 6 years old.
Since the payments are a tax credit, they don’t count against a person’s overall income for income eligibility purposes and the money won’t be taxed.
If the IRS has the direct deposit information on file, the money is deposited directly into a bank account; otherwise, it’s mailed as a check or a debit card. The payments will be made on the 15th day of the month. The payments can’t be garnished to pay off existing federal tax debt, although they can be garnished to pay off debts to “non-federal creditors.”
As Davis noted during the press conference, payments are available to families that normally don’t earn enough to be required to pay taxes. They can use the non-filer sign-up tool available on the IRS website. The agency is also planning to set up a portal that would allow recipients to update how many dependents they have, among other information.
The IRS estimates that around 39 million families will benefit from the child tax credit expansion.
Davis trumpeted the credit expansion as the biggest federal effort to help the poor since the creation of Medicaid.
“This is the day when millions of American families all over the country will receive their first payment, their first installment on the tremendous child tax increase that has been engineered by President Joe Biden and everyone who worked with [the president and his staff],” he said.
“This is the best legislative impact that I know anything about that has happened in this country since the mid-1960s, when we had what was called the Great Society program, when we [created] Medicaid. When we had what we called the War on Poverty. And that’s what this tax credit is going to do. It’s going to reduce child poverty.”
Sharde Snyder, a North Lawndale resident and a therapist at the neighborhood’s St. Anthony Hospital, said that many of her clients are low-income and she has seen first-hand how child tax credits allowed them to save money. She said that the expansion is especially helpful for families where adults lost jobs during the pandemic.
Tamera Fair, the head of the Premier Child Care daycare chain, said that, with many families already struggling even before the pandemic, the expansion couldn’t come soon enough.
“We see the changes already, because some of our teachers and our cooks and bus drivers are starting to get [the deposits] in their accounts,” she said.
Parents who don’t normally pay taxes can sign up for the child tax credit payments at https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool.