This is part of the plan to provide economic relief from the hardships caused by the pandemic.
Millions of parents with kids under 18 will be receiving money directly into their bank account starting June 15, 2021. According to the new administration, 88% of US children will be covered in the child cash benefit scheme, with no action required from the public to avail or initiate this, reports Washington Post.
The payout is a result of the Democrats' coronavirus relief bill, which aims to provide citizens some relief from the economic hardships caused by the pandemic. The monthly benefits will go directly into the families' account on the 15th of every month, or the date closest to it on months when there is a holiday anticipated on the 15th.
Families with a child under six years of age will receive $300/child and those with a child six and above will receive $250/child. For a couple with a single child under six, that would cover costs of about $3600 per annum and $3000 per annum for those with a kid aged six and above. If it is a larger family, say with two kids, one under six and one above, then they will receive $550 per month until the end of the year.
Families with high income may receive lower amounts or none at all, based on their income bracket. Right now, the cut-off for lower benefits seems to be around $75,000 as individual income and $150,000 as combined income of a couple.
According to Forbes, these are the criteria for receiving the benefit:
- Your child must have a Social Security Number
- Your child/children must live with you for at least half the year
- You must financially provide for more than half of your child's support, including food, clothing, education, lodging, utilities, repairs, and other costs.
The larger goal of this scheme is to reach families that are too poor to pay taxes, and thus, excluded from the existing benefits given by the IRS. This policy now ensures that those who need most assistance—over tens of millions of low-income families, who are too poor to be in the IRS roll—are given the economic relief needed to get through this year.
According to CNBC, the IRS is working on a portal that will allow families currently not filing tax to submit their data in order to receive their deposit. It will also allow taxpayers to update family details such as a change in custody, which parent is to receive the deposit, and for new parents who have a child during the year to update the information when required.
Washington Post highlights President Biden's statements during his speech in April addressing the Congress, when he explained how this scheme would benefit American families: “With two parents, two kids, that’s $7,200 in the pockets you’re getting to help take care of your family,” Biden said in his address to Congress in April. “And that will help more than 65 million children and help cut child-care poverty in half, and we can afford it."
References:
https://www.washingtonpost.com/us-policy/2021/05/17/biden-child-tax-benefit/
https://www.forbes.com/advisor/taxes/how-new-monthly-child-tax-credit-payments-will-work/
Cover image credits: Getty Images | Photo by sturti (Representative Image)
