The child tax credit payments authorized in the latest Covid relief bill may not be sent monthly and may not even start in July, IRS Commissioner Charles Rettig said.
The $1.9 trillion American Rescue Plan signed into law by President Joe Biden on March 11 contained a significant expansion of the child tax credit. Under the law, families will receive a $3,000 annual benefit per child ages 6 to 17 and $3,600 per child under the age of 6 for the 2021 tax year.
The payments to families were slated to begin in July and intended to be sent monthly, instead of as a lump sum, as House Democrats proposed. But that might not happen, especially now that the IRS has extended the tax-filing season for individuals to May 17 from April 15, Rettig said during a Thursday hearing with the House Ways and Means Committee.
More from Invest in You:
Suze Orman: Don't invest your stimulus checks. Here's what to do
Women are more financially stressed. Here's how to overcome it
Women lag behind men in saving for retirement. Covid made it worse
That's because the IRS now has less time to devote to implementing and launching a portal for the program, which it must do by July 1, Rettig said.
"I don't have the resources to devote to that portal until the filing season ends," said Rettig.
In addition, it might not be possible for the IRS to send monthly payments, at least at first, according to Rettig.
To see how much you could expect to receive, personal finance website Grow created a calculator that factors in your filing status, annual income and the number of dependents you have.
"It might be a challenge to get it monthly right out of the box," said Rettig. He pointed out that in the final bill, the language was changed to payments sent periodically instead of monthly, giving the agency more flexibility.
"We're focused on trying to get these payments out to the people in a meaningful manner and a meaningful timeframe," he said.
You must file a tax return to get the child tax credit
Rettig also reiterated that it's important for all individuals and families to file a tax return this year, even if they previously haven't. The IRS needs the return to send the tax credit payments to eligible people, he said.
In addition, filing a 2020 tax return is the only way to claim any stimulus payments you were eligible for but didn't receive.
And, people who didn't file in the past may be able to take advantage of other tax breaks beyond the child tax credit, Rettig said.
The full credit is available to individuals who have children and adjusted gross income of less than $75,000, or $150,000 for a married couple filing jointly. The benefit will begin to phase out for taxpayers who make more money, and end for individuals earning $95,000 and married couples earning $170,000 filing jointly.
SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.