Families recovering from year of uncertainty hopeful about Child Tax Credit payments starting July 15
The Child Tax Credit was expanded for tax year 2021 so parents can get half of the credit early — before filing their taxes in early 2022 — through advanced monthly payments ranging from $250 to $300 from July to December.
For Chicago resident Shainise Norals, the advanced payments of the Child Tax Credit expected to start trickling into bank accounts in a few weeks can’t come soon enough.
Norals, 20, has a 1-year-old, and she was among those who recently got a letter in the mail about the payments.
“I’ve been receiving unemployment; that’s going to stop soon,” Norals said. “It is kind of hard.”
She plans to use the money — which can be used for anything — to pay bills and buy personal items.
Across Illinois, about 1.3 million children claimed as dependents on taxes will be eligible for the advanced payments as part of the American Rescue Plan Act, according to figures from the Illinois Department of Revenue. The first installment of the payments will start July 15.
The Child Tax Credit was expanded for tax year 2021 so that parents can get half of the credit early — before filing their taxes in early 2022 — through advanced monthly payments — ranging from $250 to $300 — from July to December, said Christine Cheng, a consultant with the Get My Payment IL Coalition.
The credit is available to a single person whose adjusted gross income is $75,000 or less, or $150,000 or less for married couples who file jointly, according to the Internal Revenue Service.
The credit — so far only for tax year 2021 — totals $3,600 for children under 6 years old, and $3,000 for children age 6 to 17 years old, according to the IRS. That’s a bump from $2,000 per child age 16 and under.
As the city begins to recover from the coronavirus pandemic, Meegan Dugan Bassett cautions that there are still people who have been out of work for a year and others who have gone into debt to stay afloat.
“People still have to come back from that,” said Dugan Bassett, who is part of the Get My Payment IL Coalition. “That doesn’t disappear when the pandemic ends. There are still a lot of people in a tough situation even if they’ve gotten re-employed.”
The coalition, which was formed as a way to help people get stimulus payments, is trying to get the word out about the changes to the Child Tax Credit.
Some immigrant families won’t receive the credit if their child doesn’t have a Social Security number, said Joanna Ain, the associate director of policy at the D.C.-based Prosperity Now, which advocates for low-income households.
“That is something that us and a lot of other groups are pushing back against because we think everyone should be able to access [it], this especially low and moderate income families that we know have been hit the worse,” Ain said.
Rep. Lauren Underwood (D-Ill.) said at a recent news conference that the credit will help reduce child poverty. She stressed that the payments will help not just low-income families, estimating that 75% of children in her district will benefit from it.
“More money in the pockets of Northern Illinois parents means more money for day camp, child care, groceries and even family vacations and summer fun activities,” Underwood said.
Courtney Hill feels like her family of six already has spent the advanced payment of the Child Tax Credit before it even arrives. Hill, 33, of Hinckley — about 56 miles west of Chicago — has four children ranging in age from 2 to 8 years old. She and her husband work in education, and she estimates about 30% of her paycheck goes toward child care.
She anticipates the family’s cost of child care will soon double once the adoption of her youngest son is finalized, meaning they will foot the bill for day care.
“We need it right now,” said Hill, about the estimated monthly $1,100 advanced payments the family is expecting to soon receive. “We need it this month, next month, the next month after.”
As Haleigh Hutchinson, 28, of suburban St. Charles, awaits the birth of her first child next month, she and her husband had wondered if they would become eligible for the advanced payments.
Doctors have told them their son will be born with a heart condition that will require open heart surgery soon after birth, Hutchinson said. If they are able to get the payments, Hutchinson said she plans to use the funds to pay off medical bills as they are anticipating their son will need medical care beyond the surgery.
New parents like Hutchinson will be able to use the Child Tax Credit Update Portal to tell the government about the qualifying child or children they plan to claim in their 2021 tax return, according to the IRS. Hutchinson’s son is expected to be born in late July, after the first monthly payments go out to parents across the country.
Hutchinson doesn’t agree with some people on social media who have painted the credit as a government handout.
“There is a lot of, frankly, really cruel responses to programs like this,” Hutchinson said. “When you are going through already very traumatic situation, you have the ability to be given something to help, it says nothing on how hard you work.”
Weeks before the payments were scheduled to begin, Suzanne Lucio, 43, of Chicago, was trying to figure out how she can opt her family of four out of the payments, preferring to receive the lump sum when her family files taxes next year to pay off the high winter-related bills, credit cards or to treat her family with something for their home.
Families who want to opt out ahead of the August payment must do so by Aug. 2, according to the IRS. The deadline to opt out of the July payment was June 28. Families can instead claim the entire credit when they file their 2021 taxes.
“I feel like you are giving us little crumbs,” Lucio said about the advanced payments. “And then at the end of the year, boom. I don’t think it’s helping.”
Lucio said a stimulus for child care would be more helpful or a program similar to one that provided Chicago Public School children with funds to pay for food.
“It helped my household a lot,” Lucio said about the CPS program. “Whatever bills we were behind on, the money that was set aside for food, we were able to use.”
Still, some, like Hill, would like to see the advanced payments keep coming. President Joe Biden is pushing for the changes to the Child Tax Credit to extend beyond the 2021 tax year through his proposed American Families Plan, according to a news release from the White House.
The federal government has launched an online tool for families to sign up for the credit who don’t earn enough to file taxes. The IRS also recently launched another online tool to help families determine if they are eligible for the credit.
Dugan Bassett said the online tool that allows families to sign up for the payments is helpful for people who didn’t file taxes because they didn’t earn any income or earned very little. She recommended others who do have more income file their taxes instead to see if they would be eligible for other credits.
“People assume they can’t file after the tax deadline,” Dugan Bassett said. “Anyone can file after the tax deadline, the question is if you are going to face a penalty. The IRS will accept tax returns for three years.”
Elvia Malagón’s reporting on social justice and income inequality is made possible by a grant from The Chicago Community Trust.