The Treasury Department and the Internal Revenue Service released the second round of funds for the new Child Tax Credit (CTC), a key component of President Joe Biden’s American Rescue Plan that was signed into law earlier this year.
The federal government dispersed nearly $15 billion to around 40 million families that include over 61 million eligible children, the Treasury and the IRS said in a statement, an increase of about 1.6 million children covered in last month’s deposit.
Eligible families receive a monthly payment of $300 for each child under the age of six, and up to $250 monthly for each child between the ages of six and 17.
Due to a technical error, around 15% of people who received their CTC via direct deposit in July will be mailed paper checks this month. The Treasury expects the error to be resolved by the September payments.
The tax credit, which had previously been capped at $2,000 per year, was expanded under President Joe Biden’s $1.9 trillion COVID-19 relief package, also known as the American Rescue Plan.
“That’s money for diapers, food, rent, school supplies, fees and equipment for a child to join a sports team and dance class,” Biden said of the monthly tax credits in a speech on Wednesday. “Most of all, as my dad used to say, it just gives a parent a bit of breathing room. The money is a game changer. And so I would argue for some, it’s literally a lifesaver.”
Biden, members of his administration and Congressional Democrats have been pushing to keep the credit, which is currently set to expire at the end of the year, permanently. An extension of the Child Tax Credit is part of Democrats’ $3.5 trillion budget resolution, part of the two-track approach of Biden’s domestic agenda.
According to data from Household Pulse Surveys taken directly before and after the first round of child tax credit payments were sent out, there is a possible link between the checks and the amount of households and children suffering from food insecurity.
“Even though adults in households with children are more likely to experience food insufficiency, those households saw a 3 percentage point decline between the surveys conducted before and after the CTC payments,” the survey found in part. “Adults in households without children did not see a change in food insufficiency during the same period.”
The president has long promised that the revamped child tax credit program will cut the rate of childhood poverty in half nationwide — and at least one study estimates it could cut child poverty by 45%.
Still, some advocates argue the money may never reach the neediest because their incomes are so low they aren’t required to file a tax return, they don’t have a fixed address or bank account, or don’t have the internet savvy to apply.
On Friday, the IRS and Treasury Department announced several efforts to combat those criticisms, in part by launching a bilingual, mobile-friendly platform to reach “more Americans who do not regularly file taxes to claim their CTC.”
“Treasury will work with Congress to ensure the effort is fully resourced,” the department announced in part. “The Administration will also work with Congress to provide the necessary funding for a multi-year effort — leveraging public sector and community-oriented solutions — to reach and sign up more families and children.”
Users can expect to see an online sign-up tool created by Code for America in the coming weeks.
The Associated Press contributed to this report.
