WASHINGTON — President Joe Biden on Thursday marked the first day of payments being issued to millions of American families under a new expanded child tax credit, describing the monthly payments as "life changing" and urging Congress to extend them beyond this year.
Speaking from the White House to an audience that included parents and their young children, Biden said the monthly payments of up to $300 for each child will provide families with "breathing room."
"This can make it possible for a hardworking parent to say to his or her child: 'Honey, you can get your new braces now. We can get you a tutor to help you in the math class you're having trouble with. We can get you the sports equipment you need to sign up for your first team you're going to play on,'" Biden said.
The expanded child tax credit was approved by Congress in March as part of the $1.9 billion coronavirus relief package, and subsequently signed into law by Biden, who pushed for its inclusion in the stimulus bill.
The expanded credit builds upon the previous $2,000 one-time credit that parents previously claimed for children 16 and younger when they filed their taxes to the Internal Revenue Service. Under the current expansion, families qualify for up to $3,600 for each child ages 5 or younger and $3,000 for each child between the ages of 6 and 17.
Couples who earn $150,000 or less, single parents who earn $75,000 or less, and individual parents who file as "head of household" earning $112,500 or less will qualify for the full expanded credit. The Internal Revenue Service has said it will use the most recent income tax filing information it has on file for families, either from 2019 or 2020, to determine eligibility
Those who earn above the income threshold can expect to see less of a credit — $50 will be deducted for every $1,000 over the income limit until families are phased out. Most joint filers earning $440,000 or less can expect to see some level of credit. The IRS has said about 90% of U.S. families will qualify for the expanded credit.
Parents can expect to receive half of the credit in monthly payments issued between July and December and will receive the other half in one sum when they file their 2021 income taxes with the IRS next year. Parents can also opt out of the monthly payments on the IRS website (irs.gov) and receive a one-time credit when they file their taxes next year.
Rep. Tom Suozzi (D-Glen Cove), said he is urging families to discuss whether they should opt out of the monthly payments, noting that some families may be on the hook for overpayments by the IRS if their income has changed above the income thresholds.
"The need will differ from family to family," Suozzi said.
Rep. Kathleen Rice (D-Garden City) described the credit as "money directly in the pocket of hardworking families to put food on the table, pay the bills, and build a better life coming out of this pandemic."
For the first time, the credit is also available to low-income parents who are not required to file their taxes because they do not earn enough money. The IRS is encouraging those families to submit a non-filer application on the agency's website.
The increased tax credit only applies to 2021, but Biden and Congressional Democrats have been pushing for an extension.
Biden on Thursday urged Republican lawmakers who voted against the stimulus package to support an extension of the expanded child tax credit that he has proposed as part of his sweeping infrastructure plan.
"To the people that say we cannot afford to give the middle-class a break, I say we can afford it," Biden said.
The Treasury Department and IRS began distributing the first batch of monthly child tax credit payments on Thursday, according to administration officials. Payments were sent to 35 million families with some 60 million children.
Biden and the White House have often pointed to studies that indicate that if the credit is extended or made permanent, childhood poverty levels in the United States could be reduced by up to 50%.
Some Republicans have openly criticized the payments, arguing they could create the potential for fraud.
Sen. Marco Rubio (R-Fla.), in a statement issued by his office, decried the payments, saying "The Biden Child Allowance is anti-work, and it certainly isn’t pro-family. No one should be fooled."
Senate Majority Leader Chuck Schumer (D-N.Y.), a lead negotiator of the stimulus package, chided Republicans for voting against the package, saying at a news conference the expanded child tax credit is a "big effing deal."
"We are sending taxpayer dollars right back to American parents," Schumer said. "This will amount to a substantial and potentially life altering tax cut for American families. It is one of the largest tax cuts average American families have gotten in a while."