The expansion of the Child Tax Credit is considered one of the most significant tax changes in President Joe Biden’s $1.9 trillion American Rescue Plan, given the measure will pay out monthly checks later this year to millions of families. But the IRS is warning that families may face delays in receiving the checks as it grapples with sending stimulus checks and handling its current tax season duties.
The relief bill overhauled the Child Tax Credit (CTC) by expanding the benefit from $2,000 annually to as much as $3,600 per child, including more low-income families in the tax benefit — and doling out half of the money through monthly cash payments. Those monthly payments are scheduled to start in July and run through December, and could provide a measure of financial stability to millions of families as the economy begins to recover from the pandemic.
“It might be a challenge to get into monthly right out of the box,” IRS commissioner Charles Rettig told lawmakers on Thursday. He added that the tax agency would “do our best.”
The IRS is under enormous strain given the pandemic and the additional workload from the latest round of stimulus checks. On Wednesday, it reported delivering 90 million stimulus checks to eligible adults and dependents, with plans to issue millions more over the next few weeks. At the same time, it is in the midst of the ongoing tax filing season, and this week pushed back the deadline for submitting tax returns until May 17 from its traditional April 15 deadline.
That delay in the filing deadline could put the Child Tax Credit timing at risk, Rettig said. He added that he wasn’t in favor of delaying the tax deadline because it will give the IRS less time to create a new online portal for the Child Tax Credit.
“We now have one month less to do the development,” Rettig said. “The same people who do our income tax processing, IT departments, are the people that need to develop that portal. So I don’t have the resources to devote to that portal until filing season ends, which is May 17.”