A new report finds that most of the American families who have received monthly child tax credit payments have experienced greater financial stability.
The child tax credit was expanded in March when the American Rescue Plan was signed into law. That tax credit provided $3,000 per child under 17, and $3,600 per child under 6. Half of that lump sum was set to be issued in monthly advance payments, which have been going out to families over the last several months.
The remaining half will be available to use as a traditional tax credit during tax season.
How much have families saved because of the child tax credit?
A bank account analysis by SaverLife found that recipients of the child tax credit were one-third more likely to increase their savings by $100 in August than the previous year. They were also 18% less likely to have to reduce their savings by any significant amount.
“The child tax credit is a critical support for most of our families,” said Radha Seshagiri director of public policy and systems change at SaverLife. “It is really interesting to see how the child tax credit really impacted their spending positions if they knew they could count on the money.”
Families say the money has helped them stay ahead, despite the uncertainties of the economy. “It makes more sense to do it this way,” Marshall DeMetri told FingerLakes1.com. “Instead of making people wait to have some of their taxable income reduced – why not give the money back to the people right away? They need it more than the government does.”
DeMetri’s family has been receiving monthly payments. He and his wife have two children. They say the money has helped them cover back to school costs, as well as late-summer essentials as sports wrapped up. “Everything is more expensive, so the advance went a long way,” he added.
Are issues with dispersing those checks fixed?
While most issues have been addressed with getting child tax credit payments out the door – the IRS is still facing some challenge.
First, they are still backlogged. Millions of tax returns from 2020 are still not processed. That’s creating some delays for families who fall into this category – and therefore have ‘missing’ information.
Second, thousands of families have reported differing amounts being sent by the IRS each month during the child tax credit advance period. The payments went out first in July. But a number have received different amounts in July, August, and September. The fourth round of checks are set to come out in a couple weeks, so updating your information within the IRS Child Tax Credit portal is important.
The IRS says that backlogged child tax credit checks will be going out over the next several weeks.
FingerLakes1.com is the region’s leading all-digital news publication. The company was founded in 1998 and has been keeping residents informed for more than two decades. Have a lead? Send it to [email protected].