WASHINGTON - President Joe Biden on Monday announced that the government is giving a helping hand to working parents hit hard during the coronavirus pandemic.
39 million families will start receiving monthly child payments starting in July.
But how exactly does this work?
Most parents know when you file your taxes, you get a child tax credit – a deduction for each of your children.
Well this is an advance on that money for this year's taxes.
You’re going to get half of it now – in real time, paid monthly.
President Biden laid out the plan on Monday.
"I’m announcing today on July 15th and the 15th of every month thereafter, you will get deposited in your account half of your tax cut- at least $250 per child each month," Biden said.
The 2021 child tax credit is bigger than ever before – $3,000 per child. $3,600 for kids under age six.
But not everyone qualifies, and financial planner Jason Howell explains, if your income is over a certain amount those numbers start to go down. "You can make up to $75,000 and have a kid and not have any reduction or as a couple up to $150,000 and not have any reduction. After that you reduce your credit by $50 for every $1,000 that you're over on your income."
It’s all based on the income reported in your 2020 tax filing, which was due today.
As the president announced, half of your child tax credit will be paid out to you monthly this July through December and you’ll get the other half when you file your taxes next year.
The payments will come via direct deposit if you have that set up through the IRS – otherwise through the mail.
President Biden has proposed extending this system through the year 2025 as part of his $1.8 trillion families plan– saying it could cut child poverty in half. The expanded credits could cost roughly $100 billion a year.