Parents have one more payday to look forward to before 2021 comes to an end.
While the U.S. economy is in pretty good shape these days, that was far from the case back in March, when the $1.9 trillion American Rescue Plan was signed into law. At the time, unemployment was still rampant and jobs were difficult to come by. Throw in limited COVID-19 vaccine availability, and many people had no choice but to stay out of the labor force, whether they wanted in or not. And so it made sense to send Americans a round of stimulus checks at the time, plus put other relief measures into place.
One such measure was an expansion of the Child Tax Credit. Prior to the current year, the credit maxed out at $2,000 per eligible child. This year, it’s worth up to $3,600 for children under age 6 and $3,000 for children aged 6 to 17.
The 2021 Child Tax Credit is also fully refundable, so if a recipient has no tax liability, they can still get the full amount they’re owed. Plus, half of the credit has been paid this year in the form of monthly installments, the first of which went out in July.
At this point, there’s just one more monthly installment payment scheduled to hit Americans’ bank accounts, and its estimated arrival date is Dec. 15. (Those who don’t get those payments by direct deposit may not see their money for a few extra days.) But will December’s Child Tax Credit installment payment be the last one Americans get?
Monthly payments could continue in 2022
The boosted Child Tax Credit has done a great job of helping lift families out of poverty. And so lawmakers have fought to keep the expanded version around for another year.
A few weeks ago, House Democrats passed the $1.75 trillion Build Back Better Act, and that allows for the boosted Child Tax Credit to stay in place for 2022. It also keeps the credit fully refundable and makes monthly installment payments a solid possibility.
But now, the Senate needs to approve that measure, and if that doesn’t happen by the end of December, recipients could see a lapse in their monthly Child Tax Credit payments, or even, depending on how things shake out in Congress, see those monthly installments go away. As such, families in line for next week’s installment payment should really make a point to put it to good use, whether that means socking it away in savings or using it to load up on household essentials.
Many families have become reliant on those monthly installment payments, especially in light of recent inflation. And while half of this year’s Child Credit Tax will still be available to recipients in early 2022 in the form of a tax refund, if monthly installment payments aren’t continued, that could still result in a lag.
The IRS typically begins accepting tax returns in late January and can process refunds as quickly as three weeks upon receipt. But if there’s no monthly Child Tax Credit installment payment in January, recipients may need to wait until February or March to get the rest of their money from 2021. That could, unfortunately, leave some households in a serious financial lurch.