Saturday marked the first time since June of last year that millions of Americans didn’t get a monthly child tax credit on the 15th of the month. At the same time, there has been a slew of headlines for weeks about the on-again, off-again political brawl over renewing the monthly stimulus checks. Which may still come to pass. But the fact of the matter is, at least for now, it hasn’t. And there’s no indication yet that the checks will return, at least in the near term.
The political dynamic in the Senate that effectively put an extension of the monthly checks on ice has not changed in recent weeks. However, let’s set that aside for a moment. And let’s set also aside all the backroom negotiating and the compromises that are being floated to try and win the approval of one more Democratic Senator (and we all know who he is at this point) to get the child tax credit checks started back up again. There’s one point, though, that’s gotten a little lost in all this: The credit itself hasn’t actually gone away. Millions of Americans, in fact, will still benefit from the child tax credit this year.
Right now, though, let’s back up a moment. President Biden’s $1.9 trillion American Rescue Plan, remember, set all this in motion. It took what had been a maximum $2,000 child tax credit amount and dialed that up to $3,600. That’s per eligible child, under the age of 6 (the amount was $3,000/child between ages 6-17). Whatever amount a family was eligible for, though, it got sliced into two tranches. The second half is coming this year, in the form of a tax credit the families can use on their federal tax return.
The first half came last year, between July and December, in the form of six monthly checks.
West Virginia Democratic Senator Joe Manchin’s refusal to vote in favor of extending those expanded child tax credit amounts into this year meant that, come January 15, things reverted back to the way they were.
But remember: Things got reversed back the way they were, not back to zero. The maximum credit dropped from $3,600 to $2,000. The other key difference, of course, is that the $2,000 will now come all at once, in the form of a tax credit that will lower your overall tax obligation. As opposed to giving that benefit out in the form of a check — which is money the recipient can spend right away.
What’s next for the child tax credit
Right now, the IRS is in the process of sending out letters to recipients of the monthly child tax credits. So keep an eye out for them in your mailbox. You’ll need to make sure the details on the letters match up with what you put on your federal tax return this year.
Speaking of this year’s federal tax return? That’s also where recipients will claim the second half of their child tax credit from 2021. Democrats, in the meantime, are trying to lean on Manchin and come up with some sort of compromise that keeps him onside for an extension of the expanded credit.
Parents should be aware, though, that notwithstanding the news coverage about the expanded child tax credit not being extended — that doesn’t mean the credit has gone away entirely. Families can still be eligible for up to $2,000 per child.
As a side note: The child tax credit was that high to begin with, thanks to the 2017 Tax Cuts and Jobs Act. Signed into law by President Trump.
Meantime, check out some of our most recent stimulus check coverage below: