Child tax credit payments start going out to families

METRO DETROIT — COVID-19 brought with it a variety of problems for everyone, with parents of young children being some of the most drastically affected.

With schools, workplaces and day cares opening up, shutting down or going through various safety-measure changes, parents were often thrown for a loop.

“When COVID started, I was working at the day care (my son) Silas went to,” said Megan Weins, of Battle Creek, who is a mother of one. “Then we moved, and we had to find a new one; then that closed. Then we had another one that was too far out of the way. Now, finally, he’s at a new preschool, so he’s had four schools since COVID started.”

Parents such as Weins and her husband, Cody Licari, are receiving some new relief due to the federal government’s child tax credit. Parents of children under the age of 18 will be receiving monthly payments to aid with the extra strain many of them felt during COVID-19.

“The child tax credit was part of the American Rescue Plan, so it raised the maximum child tax credit on people’s taxes this year from a max of $2,000 per child to $3,600 for children under the age of 6, and $3,000 per child for children ages 6-17,” explained Dewey Steffen, the CEO of Great Lakes Wealth in Northville. “They are available to taxpayers with a modified adjusted gross income of $75,000 or less if you’re single, $112,500 if you are a head of household or $150,000 for married couples filing jointly or a qualified widow or widower.”

The tax credit is sent out monthly to families to help provide relief following the extra costs and lost income felt by many during the COVID shutdowns.

“I’ve definitely been feeling the difficulties the same as everyone else had,” said Weins. “I wasn’t sure I was getting the tax credit and then suddenly my husband, Cody, said we had an extra $300 in our account. Three hundred dollars is two weeks of day care, so that’s super useful for us.”

Weins said she was lucky since her father, Robert Weins, is a certified public accountant and was able to walk her through the process. Most families are still having to play catch-up with the new changes.

“My other daughter has three kids, and she’s only working part-time at most, so she’s affected by this even more. It’s $850 a month for her,” Robert Weins said. “It’s an additional supplement to help families to recover during the next 18 months because COVID messed so many things up in the last year.”

Steffen said that the tax credit is designed to be simple to understand, which he laughed and said can be a rarity among tax rules.

“It went into effect on July 15, so it’s hot off the presses,” said Steffen. “It’s not something people will have to deduct on their tax returns in a way that will affect most families.”

“It automatically went into our account. There’s nothing annoying that we have to do at tax time,” Megan Weins said. “It doesn’t affect our refund.”

Steffen said most families shouldn’t have to do anything to get the tax credit. Most should have already gotten their first installment before the end of July.

“To get it automatically, you had to have filed a 2020 tax return,” he said. “If the government has your 2020 tax return on file, they will have already started sending out these credits. It’s the same concept as what they did with the per-child payments last year during COVID.”

Those who are experiencing difficulties or who are new parents can take steps to ensure they are getting the credit, as well.

“For new parents, or if people haven’t received their payments, they can go to www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021,” Steffen said. “To be eligible, the child must not turn 18 before Jan. 1, 2022, and if you had a child in 2021, you are eligible assuming you qualify for the adjusted gross income qualification. You can go to that website and apply, if you are a new parent.”

Steffen said the goal is to help families survive and to reverse the economic difficulties caused by the COVID shutdowns.

“It’s done to boost the economy after COVID, but also it’s to help families with children in low- to middle-income families not slide into poverty,” Steffen said. “This is going to be a significant boost to low-income families. Having the money now is a big catalyst for companies and industries who get a boost from families getting these payments; this means grocery stores, clothing stores and so forth. The big thing is families that are paycheck to paycheck could get a stopgap from slipping into poverty. … The government is hoping this will help pay for essentials like doctors’ visits, groceries and so forth.”

Steffen advises that everyone speak to a financial adviser for their particular situation but added that this is an opportunity that any family with young children shouldn’t miss.

“This should really help us,” Megan Weins said. “I think it’s been a tough year for everybody. Everything that can help is important.”