$1,400 Stimulus Checks Aren't the Only Direct Payments Some Americans Could Receive

While much of the focus of the forthcoming relief package has been on a third round of stimulus checks, American parents could see even higher payments because of revisions to the child tax credit.

The House of Representatives passed a $1.9 trillion relief package, known as the American Rescue Plan, and the Senate is expected to vote on it this week. Along with extending unemployment benefits and providing another round of direct payments, the package would increase the child tax credit by $1,000 and $1,600, depending on the age of the child.

If passed in the Senate, the American Rescue Plan would send out monthly payments to parents as an advance on the refund they'd receive as part of the Child Tax Credit. Joint filers with incomes of $150,000 or less or individuals with adjusted gross incomes of $75,000 or less would be eligible for an annual payment of $3,600 for children under six and $3,000 for children under 17.

Instead of receiving it in one lump sum, eligible parents would receive monthly payments from the Internal Revenue Service worth 1/12 of the advance amount. It's only a temporary change to the Child Tax Credit, though, and would end in January 2022.

"The coronavirus pandemic did not just shine a light on child poverty, it exacerbated it, and amplified the need—and the urgency — for expanding and improving the child tax credit," Representative Rosa DeLauro said in a Friday statement. "For a long time, we've known that this change would dramatically cut child poverty, with enduring benefits for children and their families."

child tax credit stimulus check
American parents could receive a bigger boost than just a stimulus check because of increases to the Child Tax Credit. In this Photo Illustration, Twenty and five dollar bills are displayed on August 29, 2017, in San Anselmo, California. Justin Sullivan/Getty

Under the Child Tax Credit, parents can receive a credit of up to $2,000 for each child under the age of 17 and receive a $1,400 refund if the amount exceeds the taxes that are owed. While the credit is less than that outlined in the American Rescue Plan, it allows for people with higher incomes of $200,000 for individuals and $400,000 for joint filers, to claim it

Those who aren't eligible for the increase in the credit under the American Rescue Plan can still claim the $2,000 credit per child.

The Center for Law and Social Policy said the changes to the Child Tax Credit are expected to cut child poverty in half. If made permanent, they would have "multi-generational, positive effects," according to the advocacy organization.

Payments would begin in July and run until the end of December. If a person receives more than they're owed, they won't have to repay the amount if they're an individual with an income below $40,000 or a joint filer with incomes below $60,000.

During Saturday's vote in the House, no Republicans voted in favor of the package and two Democrats—Oregon's Kurt Schrader and Maine's Jared Golden—opposed it. The Senate is expected to vote on it before March 14, when unemployment benefits expire. Under a method called reconciliation, Democrats wouldn't need Republican support, as long as they had both Independents that caucus with them on board.

But, with progressives pushing for it to go farther and some moderates questioning parts of the package, its probability of passing in the Senate isn't as secure as it was in the House.