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Federal payments for parents start this week amidst IRS backlog

© iStock - Evgenia Parajanian
Casey Harper | The Center Square

(The Center Square) – Another round of federal payments will be sent to millions of families this week.

The IRS will begin sending advances on annual child tax credits Thursday for qualifying families as part of President Joe Biden’s $1.9 trillion COVID relief bill passed earlier this year. Biden signed off on the new law in March, which will pay as much as $300 per child on a monthly basis through December. Previously, Americans with children received the credits when they filed their incomes taxes each spring.

“Families eligible for the #ChildTaxCredit should file [2020] tax returns soon, if they haven’t yet, to make sure they receive the appropriate amount of the Advance #ChildTaxCredit payments,” the IRS said on Twitter.

The federal government will send up to $300 for children under 6 years old, and up to $250 for children 6 and older.

“The American Rescue plan increased the maximum Child Tax Credit amount in 2021 to $3,600 per child [annually] for children under the age of 6 and to $3,000 per child for children ages 6 through 17,” the IRS said. “The advance Child Tax Credit payments, which will generally be made on the 15th of each month, create financial certainty for families to plan their budgets."

According to the White House, “All working families will get the full credit if they make up to $150,000 for a couple or $112,500 for a family with a single parent…”

Qualifying parents do not need to request the payments. They will begin receiving them automatically if they qualify. For many Americans who have set up direct deposits with the IRS, they will have the money put directly into their bank accounts.

If parents would like, they can defer payments so they receive the funds after filing their federal income taxes instead of in monthly installments.

“The Child Tax Credit Update Portal allows families to verify their eligibility for the payments and if they choose to, unenroll, or opt out from receiving the monthly payments so they can receive a lump sum when they file their tax return next year,” the IRS said. “This secure, password-protected tool is available to any eligible family with internet access and a smart phone or computer. A Spanish version is also planned. Both the Child Tax Credit Eligibility Assistant and Child Tax Credit Update Portal are available now on IRS.gov.”

The payments, though, come during a time of major backlog at the IRS.

A federally authorized report from the National Taxpayer Advocate found that millions of tax returns have been hung up in processing, leaving many Americans waiting for their refunds. The IRS cited COVID and additional stimulus checks as the cause, raising questions about whether the IRS can successfully pull off this newest monthly payment program.

“The 2021 filing season was the quintessential definition of a perfect storm,” the report says. “No one could have predicted a global pandemic or the lasting and lingering impact to taxpayers, IRS employees, and tax administration during the last 15 months. To state the obvious, this filing season has been challenging for tens of millions of taxpayers and anything but normal for the IRS and its employees.”