Margarita Rodriguez is an early riser, waking at 3 a.m. to prepare for her 4:30 a.m. shift at a Passaic, N.J. delicatessen.
But on Thursday, July 15, Rodriguez has something special planned for her morning routine. As soon as she’s up, she’ll check her bank account to see if the Child Tax Credit money for her boys has arrived.
Four months after federal lawmakers passed the $1.9 trillion American Rescue Plan, which increased the Child Tax Credit’s payouts in monthly installments, July 15 marks the first of those mid-month payments.
“I have faith it will come that day,” said Rodriguez, 40, told MarketWatch through a Spanish-language interpreter as she crossed her fingers.
The monthly installments will be up to $300 for children under age 5 and up to $250 for children between 6 and 17. Rodriguez is expecting $550, comprising $250 for her 16-year-old son and another $300 for her five-year-old son. Her other son is 21, which makes him too old for the boosted CTC payments that pay for children up to age 17.
Her top goal is paying off the $1,200 debt from past-due electricity bills. “I want to be without that fear that I’ll come one day and there won’t be light in my home,” she said.
The payments will reach approximately 39 million households that account for 88% of the country’s families with kids.
The advance payments on the expanded tax credit are being distributed through direct deposits and paper checks on July 15, August 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15, according to the Internal Revenue Service.
This year, the credit increases from $2,000 to $3,600 for children under age 6 and $3,000 for kids between age 6 and 17. Half the sum can be advanced and distributed monthly.
The thresholds are the same as for stimulus checks: $75,000 a year for individuals, $150,000 a year for married couples filing jointly, and $112,500 a year for people like single parents who are filing as Head of Household.
“The CTC provides certainty for families by providing support for every single month through the end of the year,” said Adam Ruben, director of Economic Security Project Action, an advocacy organization that’s pressed for more ongoing cash support for families.
More specifically, those dates represent the day when the money from a direct deposit transfer is expected to actually be in an account and ready for use, a Treasury Department spokeswoman told MarketWatch.
Some people may see pending credits on their account ahead of those dates, she said, adding that paper checks will be mailed on or before the payment dates.
The U.S. Postal Service will follow the Treasury Department’s schedule, a postal system spokeswoman said. Paper check recipients can expect to get their payments, coming as First-Class Mail, in one to three business days, she said.
Overall, the payments will reach approximately 39 million households that account for 88% of the country’s families with kids, according to the Treasury Department. They will cost the government over $100 billion this year alone.
However, only 55% of potentially eligible parents say they’ve read or heard at least something about the expanded CTC, according to one poll conducted in June.
Current bank-account information
America’s banks are ready to get the CTC advance payments to families, said Sarah Grano, a spokeswoman for the American Bankers Association, a trade organization. “Those eligible should make sure the IRS has their current bank-account information to ensure they receive their funds as quickly as possible.”
People can update their banking information starting ahead of the Aug. 13 payment, the IRS said.
The arrangement is similar to the way the government beamed out stimulus checks.
During the third round of checks, which were $1,400 apiece, some consumers complained banks were holding onto their money. It was a two-step process where the direct deposit information arrived first and then the fund arrived next, via the Automated Clearing House or ACH Network.
The ACH network is the national transaction processing platform that facilitated almost 27 billion payments last year, totaling almost $62 trillion.
The National Automated Clearing House Association or Nacha, which supervises the network, said March there can be same-day delivery of the direct deposit information and funds, or an interlude of one or two banking days. The IRS chose the latter, Nacha said.
Officials at the IRS, Treasury Department, Bureau of Fiscal Services, Federal Reserve Banks and the Federal Reserve Board met with Nacha members a week before the first payments were due to discuss the best ways to use the network “to consistently deliver these payments each month from July through December 2021,” Nacha added.
Problems with stimulus-check rollout
“The stimulus checks were a powerful boost for families, but the one problem was you never knew when you were going to get one,” Ruben said.
Various research shows the timing and certainty of payments and benefits can really matter in a family’s financial life from month to month, especially if the family is struggling, said Katherine Michelmore, a professor of public administration and international affairs at Syracuse University who has studied the Child Tax Credit.
For example, one 2018 study showed that students in households receiving food stamps had “notably lower” standardized math scores if those tests happened to occur near the end of the benefit cycle, she said.
The mid-month CTC payments might perhaps give some families an extra boost if their rent and bills were due at the first of the month, said Michelmore.
Either way, knowing the CTC money is “coming on a specific day is really helpful to families that are living paycheck to paycheck.”
As of late June, just over 28% of families said they were finding it difficult to pay for usual household expenses, according to national averages in an ongoing Census Bureau survey, down from 35% at the beginning of the year.
Back in New Jersey, Rodriguez said it’s sometime tough to go out with her youngest son, Saul, because he’ll ask her to buy items and toys she can’t afford.
The incoming cash gives a little bit of relief for those pangs — and plans for other things, like a laptop for Saul, money to send to her mom in Mexico and cash to put towards a car.
“I’m going to be able to do a lot,” she said.