Copyright © 2021 Albuquerque Journal
An expanded child tax credit, which is expected to have a massive effect in New Mexico, will funnel hundreds of dollars into family bank accounts each month starting July 15, the Internal Revenue Service and U.S. Treasury Department announced this week.
The federal agencies said they will be boosting their outreach efforts in the coming months to let people know about eligibility for the tax credits. Last week, Rep. Teresa Leger Fernández, D-N.M., hosted a virtual forum during which she asked New Mexicans without any tax liability who may not typically file a tax return to do so, which she said will allow the money to start flowing into their bank accounts.
“I would like to see (the child tax credit) permanent,” she said. “But what I would like to do right now is make sure that everyone who is entitled to the tax credit receives it.”
Sen. Ben Ray Luján, D-N.M., said 95% of the state’s children will qualify for the payments.
“From the beginning of this pandemic, New Mexico families have struggled to make ends meet,” Luján said this week. “That’s why I worked in the Senate to pass the American Rescue Plan to deliver much-needed relief to New Mexicans and strengthen the Child Tax Credit to combat child poverty.”
Many families will be able to receive the payments through direct deposit, and if they don’t have direct deposit they can receive the money by check or debit card, according to a Treasury Department news release. The department said most families who have already filed their 2020 tax returns won’t need to take additional action before receiving their tax credits.
The 2021 child tax credit was included in the $1.9 trillion American Rescue Plan signed into law in March. The amount of the credit was increased from $2,000 per child under 17 years old to $3,600 per year per child under 6 years old and $3,000 for a child age 6 through 17, according to the IRS.
The child tax credit was also changed to include families with no tax liabilities. And families will be able to choose if they want to receive the credit in monthly installments of $300 or $250 per child, depending on their age, or in an annual lump sum payment.
The monthly payments will be made on the 15th of each month, or the next business day, according to the Treasury Department. The department said that it will create an online portal before July 15 for people to make any changes to their earned income, filing status or qualifying children.
The payments will be phased out for married couples who make more than $150,000, heads of household who make $112,500 and single parents making more than $75,000.
The Biden administration has said the tax credits could lift many children out of poverty, possibly as much as 50% nationwide, according to some estimates.
As one of the poorest states in the country, with 18.2% of its population living in poverty, New Mexico may especially benefit from the program.
The Center on Budget and Poverty Priorities estimates that the direct payments from the expansion will lift 32,000 New Mexico children above the poverty level. About 39,000 children in the state who live in deep poverty will be lifted closer to the poverty level.