The Covid Economy

More children received the advance child tax credit payment in the second month

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The IRS sent out 1.6 million more advance child tax credit, or CTC, payments this month than last, the Treasury Department announced Friday.

Roughly 61 million children were eligible for the second monthly payment, Treasury said, worth more than $15 billion.

The uptick in recipients indicates that eligible families are signing up for the payments via the IRS' online portal and that outreach being done by the IRS is working to a degree. Some policy experts have worried that many low-income people who do not normally file a tax return would not know that they are eligible for the enhanced credit.

The majority of families received their August payments by direct deposit Friday, Treasury said. The rest will be mailed as paper checks. The department also said that due to a technical issue that should be fixed by next month, around 15% of families that received their payments via direct deposit in July will receive a paper check this month. Families can see how they will receive their payment using the IRS' online portal.

The expanded and advanceable CTC payments are part of the American Rescue Plan, passed in March. They are worth up to $3,600, or $300 per month, for each child under 6, and up to $3,000, or $250 per month, for each child 6 to 17. That's an increase from the previous $2,000.

The advance credits are being sent each month through the end of 2021. Eligible families will also receive a lump sum at tax time next year.

The U.S. Census Bureau found that the first payment likely led to fewer households with children going hungry last month. Almost half of households that received a July CTC payment reported that it was used, at least in part, to pay for food.

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