LOUISVILLE, Ky. — The first payments of the expanded child tax credit (CTC) are set to go out July 15, benefiting more than two million families in Kentucky and Indiana.
The child tax credit itself isn't new, but President Biden's American Rescue Plan increased the payment amount, made more families eligible for the payments and created a new distribution option so families can get the money earlier.
The Kentucky Center for Economic Policy estimates that more than one million children and families in the state are eligible for the tax credit. The increased funds should reduce child poverty in the state by 49%.
"The American Rescue Plan Act's improvements to the CTC will make it easier to afford housing, food, clothing, health care and child care - which research shows makes a huge difference in the wellbeing of children on many levels," said KCEP Senior Policy Analyst Dustin Pugel. "We urge every Kentucky family to claim their CTC."
In Indiana, nearly 1.5 million children are eligible for the tax credit, according to data from the Southern Indiana policy organization Hoosier Action. A group of women gathered in Indianapolis Tuesday to celebrate and raise awareness about the opportunities provided by the tax credit payments.
The Center on Budget and Policy Priorities said nearly half of the country's Black and Latinx families will benefit from the expanded tax credit, especially with the changes to the eligibility requirements. Before the expansion, these families only received partial or no credit at all because their incomes were too low to qualify.
Who qualifies for the expanded child tax credit?
Single filers who make $75,000 or less each year and joint filers making $150,000 or less will be eligible for the full child tax credit. Families who make more than that may be eligible for a portion of the payments.
For each child under the age of six, a family will receive a $3,600 tax credit. For each child between the ages of six and 17, a family will receive a $3,000 credit.
How will I get the child tax credit payments?
Families can opt into receiving half of their tax credit early, distributed through monthly payments. The payments of $250 to $300 will be sent out each month through December. The other half of the tax credit can be claimed on a family's 2021 tax return.
If a family chooses not to take the monthly payments, they will receive the full tax credit on their 2021 tax return.
If you normally get your tax returns through direct deposit, the IRS will deposit the money into your account. It may take up to three business days for the payments to go through. If you normally get your return mailed, the tax credit payments will be mailed as well.
You can choose to get your payments through direct deposit by entering your bank information on the IRS website. On that site, you can also check the status of your payments and check your eligibility status.