What Latino Parents Should Know about the New Child Tax Credit

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This week, millions of working families in the U.S. will receive the first payment from the expanded child tax credit implemented by the Biden Administration.

“The Child Tax Credit in the American Rescue Plan provides the largest Child Tax Credit ever and historic relief to the most working families ever – and most families will automatically receive monthly payments without having to take any action,” according to the White House website.

Although the IRS and banks have been prepping for the credit for months, there is still some confusion on what the tax credit is and who qualifies for it.

Here’s what Latino parents need to know about the new child tax credit that will be deposited on July 15, 2021.

What is the child tax credit?

In March 2021, President Biden signed the American Rescue Plan, a nearly $2 trillion stimulus bill to provide economic relief to families hurting from the COVID-19 pandemic.

One aspect of the American Rescue Plan is an enhanced tax credit for families with children.

In previous years, the child tax credit was $2,000 per child, meaning that families could subtract $2,000 for each child from what they owed in income taxes (i.e. subtract $4,000 for two children, $6,000 for three children, etc.).

Now with the expanded child tax credit, families will receive more money.

“For 2021, the maximum credit is $3,600 for children younger than age 6 and $3,000 for those between 6 and 17,” writes Carmen Reinicke, according to CNBC.

There’s no limit on the number of children you can have to receive the credit.

Who qualifies for the maximum tax credit?

Most families will qualify to receive some amount of money.

In fact, the IRS predicts that 39 million families with about 65 million children will benefit from the new expanded tax credit.

Whether you receive the full expanded tax credit or the amount from previous years depends on your household’s income.

“The full credit is available to married couples with children who file taxes jointly and have adjusted gross income less than $150,000, or $75,000 for individuals,” writes Reinicke, according to CNBC.

In a historic difference from previous years, there is no minimum income to qualify for the expanded tax credit. This means that even if a family reports $0 as income in 2020 and don’t typically file taxes, they would qualify.

There is, however, a cut-off for maximum income: $150,000.

Families with single tax filers making $150,000 to $200,000 (or $400,000 for married couples) annually would qualify for the regular child tax credit of $2,000 per child. Those with income higher than $200,000 (or $400,000 for married couples) do not receive child tax credits.

Another requirement to qualify for a child tax credit is to have a Social Security number.

While this excludes many undocumented families, they could qualify if the children are U.S. born and have Social Security numbers.

How does the tax credit affect Latinos & other POC?

Low income Latino and Black families stand to benefit immensely from the expanded child tax credit.

“Low-income families suffer from income volatility,” said Elaine Maag, the principal research associate at the Urban Institute, according to NBC. “Delivering the credit in advance is trying to take the edge off those income fluctuations, which should help families meet their needs.”

Latino and Black families tend to have less cash savings than white families, which can make a dramatic difference in economically turbulent years like 2020 and 2021.

“Expanding access to a direct-payment program such as the CTC would especially benefit Black and Latino households, who, on average, have substantially less in cash reserves than white families,” according to American Progress.

The expanded child tax credit is expected to lift over 4 million Latino children above or closer to the poverty line, predicts the Center on Budget and Policy Priorities.

However, the expanded child tax credit will only go to families with children who have social security numbers.

This means that Latino immigrant families may not receive the credit.

It’s important to note that undocumented families who have children with social security numbers can receive the tax credit without worrying about how it will affect their immigration status.

“Receiving the CTC or other tax credits that you are eligible for will not affect your immigration status, your ability to get a green card, or your future immigration plans. Use of tax credits is not considered in a ‘public charge’ determination by U.S. Citizenship and Immigration Services,” according to the Center for Law and Social Policy.

What are the expected challenges and criticisms of the tax credit?

There are some expected difficulties with the implementation of the tax credit.

“The government is uncertain how to get the payments to millions of hard-to-reach families, a problem that could undermine its poverty-fighting goals. Opponents of the effort will be watching for delivery glitches, examples of waste or signs that the money erodes the desire of some parents to work,” according to the New York Times.

Some are concerned that a lack of awareness of the expanded credit and difficulty using the IRS’s online portals may prevent families in need from receiving the financial boost.

“One of the principal concerns is that there may be families for whom the IRS doesn’t have information, especially low-income families who would benefit most from the program. There has been a drive to raise awareness by the White House, lawmakers and community organizations to the parents of around one third of children who live in poverty and whose parents aren’t required to file a tax return,” according to AS.

While opponents of the credit argue that it might disincentivize families from working, there is generally broad support in the measure.

“Compared to past aid debates, opposition has so far been muted. A few conservatives support children’s subsidies, which might boost falling birthrates and allow more parents to raise children full-time. Senator Mitt Romney, Republican of Utah, has proposed a larger child benefit, though he would finance it by cutting other programs,” according to the New York Times.

How do I sign up and get the tax credit?

Families who filed 2019 or 2020 taxes do not need to do anything to receive the expanded child tax credit.

For those who didn’t file taxes in the last two years, the IRS has a sign-up tool that can be filled out online.

If you’d like to check if you’re eligible for the expanded child tax credit, you can use the bilingual IRS eligibility tool.

Like the previous stimulus checks, the credit will be distributed through direct deposit.

The IRS will distribute half of the credit over the next six months as an advance on 2021 taxes. The second half will be distributed when families file their 2021 taxes next spring.

That means families qualifying for the expanded credit will get $300 per month for each child under 6 and $250 per month for each child ages 6 to 17 until the end of 2021.

Payments will deposit on the 15^th of each month, starting July 15^th.

“After the benefit first goes out July 15, families can expect subsequent payments on Aug.13, Sept. 15, Oct.15, Nov. 15 and Dec. 15, according to the IRS,” reports CNBC.

For more questions, visit the IRS website.

How can I support families locally?

If you want to help families and children in your own community, you can assess how health equity looks in your county.

Select your county name and get a customized Health Equity Report Card from Salud America! at UT Health San Antonio, which shows your area stacks up in housing, transit, poverty, health care, food, and other health equity issues compared to your state and nation.

The Health Equity Report Card auto-generates local data with interactive maps and comparative gauges, which can help you visualize and explore health inequities.

Get your Health Equity Report Card!