Child Tax Credit Checks Start To Go Out

The monthly child tax credit payments plan from the March stimulus package are going out to parents this week.

Washington Post:

The Biden administration on Thursday is launching the biggest anti-poverty program undertaken by the federal government in more than a half-century, delivering monthly payments to the overwhelming majority of American parents for the first time.

The Department of Treasury said it has sent checks to households representing approximately 60 million children under a provision in the stimulus package passed by Democrats in March. The payments can be withdrawn Thursday but appeared in many bank accounts as early as Wednesday. The benefit, expected to cost roughly $120 billion per year, provides $300 per child under age 6, as well as $250 per child 6 or older. The administration previously said that roughly 88 percent of all U.S. children nationwide would receive the aid.

The program is a major political and economic test for President Biden and his administration. Already, the IRS has come under fire for producing a beneficiary website that critics say is difficult to navigate. Some experts think the White House is overstating the program’s anti-poverty impact. The payments are going out amid concerns that the U.S. economy is running too hot, which means they could further fuel inflation. And the White House’s attempt to extend the program beyond December is tangled up in broader congressional negotiations, leaving its long-term fate uncertain.

But White House officials say these criticisms risk obscuring the potentially transformational impact of the new child benefit. If successful, they say, the program could lift millions of American children out of poverty — which could translate into major improvements in child nutrition, educational outcomes and mental health for an enormous number of people. The benefit also could, at least temporarily, build on goals that Democrats advanced with the passage of the Affordable Care Act by trying to expand the federal safety net for millions of families.

“This is the biggest anti-poverty effort since Lyndon B. Johnson’s War on Poverty,” said Joshua McCabe, a historian of U.S. welfare policy at Endicott College. “This is a once-in-a-longtime chance to significantly reduce child poverty.”

For the vast majority of beneficiaries, or approximately 86 percent of those receiving the payment, the new monthly benefit will be automatically deposited into their bank accounts — with no action required. Richer families are excluded from the benefit. The credit diminishes for individuals with adjusted gross income of more than $75,000, as well as for couples earning more than $150,000, and disappears altogether for higher earners.

Crucially, however, the very poorest American families are eligible to receive the benefit in full. Before this year, families were excluded from the credit if they did not earn enough for their income to be offset by the tax benefit. The stimulus repealed that limitation, meaning even Americans with no earnings would still qualify for the entire deposit amount. The benefit was also made larger and will go out monthly, instead of when taxpayers reconcile their tax returns. These changes are set to expire at the end of the year, although Democrats in Congress are preparing a $3.5 trillion spending package that lawmakers hope will extend the benefit.

The administration has said the March stimulus plan will result in child poverty falling by as much as 50 percent, citing estimates of the child tax benefit from researchers at Columbia University and others. But concerns have mounted that this number is dramatically inflated. The data kept by the IRS is often out of date, particularly for low-income families in which custodial status changes frequently. And millions of other families, often the very poorest, have never filed income taxes — which means the IRS will have trouble finding them to give them the payments.

These concerns have been intensified by concerns that the administration’s attempts to reach these parents outside the tax system are inadequate and clumsy. An online portal — prepared by the tax preparer Intuit on behalf of the IRS — has been criticized as being difficult to use, lacking a mobile option, and being accessible only in English. IRS officials declined to answer questions about how much Intuit was paid to prepare the portal, or if it adhered to the agency’s expectations. An Intuit spokeswoman also declined to comment.