On July 15, Philadelphia residents received the first of many Child Tax Credit payments. Future Child Tax Credit payments are scheduled for August 13, September 15, October 15, November 15 and December 15, respectively. The payments are part of the 2021 federal American Rescue Plan, signed in March of this year.

The tax credit was expanded to increase the credit parents receive from $2,000 per child to $3,000 for children over the age of six, and from $2,000 to $3,600 for children under the age of six, averaging $250 a month for children under six and $300 for children over six. The IRS will pay half of the total credit amount in monthly payments and the other half when parents file their 2021 income tax return.

“This is one of the single most important federal policies that will reduce poverty in this country and certainly here in Philadelphia,” City of Philadelphia’s Office of Community Empowerment and Opportunity (CEO) Policy Director Beth McConnell said. “The idea that federal policy could have such a dramatic impact on lifting people out of poverty and giving them a better quality of life – it’s staggering. We really want to make sure everyone is taking advantage of it.”

The advance payments will not affect other public benefits, such as SNAP, SSI, or Medicaid because those payments don’t count as income.

Local residents who have filed tax returns in 2019 or 2020, or have signed up to receive federal stimulus payments, will receive the payments automatically. Those who have not filed tax returns in the last two years can sign up by completing the IRS non-filer form, which also allows people to apply for stimulus payments.

“Most eligible Philadelphia families will start receiving their advance payment today, but if you do not get one, it’s a good time to make sure you are enrolled,” Mitchell Little, Executive Director of the Office of Community Empowerment and Opportunity, said. “This money will make a big difference for families experiencing hardship by helping them pay bills, buy groceries or other essentials, or save for the future, so we want to ensure that every dollar is claimed.”

If every qualifying Philadelphian enrolls in the tax credit payment plan, it could lift approximately 75,000 Philadelphians out of poverty, according to McConnell. Yet the impact goes beyond just the individual. 

“Most of the parents will be spending the money at neighborhood stores, and that’s money that will recirculate in our local economy, creating more jobs and having not only an impact on the quality of their lives, but an economic impact in the entire city,” McConnell said.

The City of Philadelphia is making sure every eligible resident receives these payments in three ways, according to McConnell.

One is by supporting nonprofit partners that provide free health for people who want to file their taxes, or want to get access to the IRS’ non-filer portal so they can claim the tax credit.

The City of Philadelphia also plans to hire a marketing and communications firm to help design a public education campaign to reach Philadelphians and help them get enrolled.

The last way is by supporting nonprofit community organizations in the area to perform outreach at the local level, ensuring all eligible Philadelphians can benefit from the Child Tax Credit.

The Biden Administration has proposed making the advance Child Tax Credit permanent, and has support from the Philadelphia delegation to Congress, according to McConnell.

McConnell said she hopes Congress would enact a similar policy to the current one and renew it so there is even more opportunity for outreach and residents can enroll into the credit payment plan in a timely fashion.

McConnell also said if they extend it permanently, Congress might be able to set it up as a monthly payment plan spanning the entire year instead of the current format where there are six monthly payments and the rest is received later on. A steady flow of monthly payments throughout the year makes it easier for local families to budget their month-to-month household expenses, according to McConnell.

If the tax credit is made permanent, McConnell hopes to see it passed by the middle of 2022 at the same rate with the prospect of increasing the rate to adjust for inflation.

If the advance Child Tax Credit is made permanent, McConnell will be ready to provide those in need with the utmost service.

“The sooner they can make it permanent, the sooner we can work to make sure every resident gets access to the tax credit they’re eligible for,” McConnell said.

For more information and assistance with signing up or filing a tax return: https://cwfphilly.org/

For free financial counseling with the City’s Financial Empowerment Centers: 855-346-7445