How do these new stimulus checks work?

Happy family with piggy bank and money at home
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Every household with children that qualifies for the current $1,400 stimulus check is set to receive the money via the expanded child credit.

If you're a family headed by a couple earning less than $150,000 or an individual making under $75,000, you're slated to get a $250 monthly payment for each of your kids ages 6 to 17, from July through December. For children under 6, you’ll receive $300.

In total, depending on how old your kids are, you’ll receive either $3,000 or $3,600 for this year. The monthly payments will account for the first half, while the other half will be refundable next year when you file your taxes for 2021.

This temporary change to the credit provides families with up to $1,600 more per child that can be used however you like: for family expenses, debt, savings — or even investing. One popular investing account you could open for your kids would allow them to grow their investments merely by adding spare change.

In previous years, you could claim a credit of only as much as $2,000 per child, and just $1,400 was refundable. Single parents earning more than $75,000 and couples with incomes over $150,000 won’t receive the full payments under the expanded credit but may still qualify for some support.

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What if your family has a 'new addition' this year?

Father Holding Newborn Baby In Nursery
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Let’s say you have a young family with a 3-year-old and 6-year-old. You can expect to receive $550 every month from July to December; if you claimed the child credit for the kids last year, they’ll be accounted for on your tax return and you should be set to receive payments.

But if you welcome a baby into the family this year, can you get checks for the new addition?

Tucked into the relief bill is a request for the IRS to set up a new online portal where families can update their information, including the number of qualifying children.

The hope is that this portal will be up and running by July, so you'll just be able to go online and enter the information about that joyful reason for all the sleepless nights you're now having.

If you don't give the IRS an update through the portal, you’ll have to wait until you file your 2021 taxes to claim the $3,600 credit for your family newcomer.

What's the deal with the delay?

IRS Commissioner Rettig has warned members of Congress that the portal and the monthly payments may be slow in coming because the agency is swamped right now as it distributes the $1,400 stimulus payments and deals with the annual onslaught of tax returns during a later-than-usual tax filing season.

It started roughly two weeks later than usual, and the filing deadline has been delayed by about a month, to May 17.

“I don’t have the resources to devote to that portal until the filing season ends," said Rettig recently told the House Ways and Means Committee.

The commish told lawmakers the agency will "do our best" to start getting the monthly checks out by July 1. But he pointed out that the law only requires that they be sent "periodically," not necessarily on a monthly schedule.

“It might be a challenge to get it monthly right out of the box,” said Rettig. “We’re focused on trying to get these payments out to the people in a meaningful manner and a meaningful time frame.

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What if you can't wait and need the money right now?

young smiling parent calculating bills at home
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If you don’t qualify for the enhanced credit, or you can’t wait for extra relief — whenever it comes — here are some options to find more cash right away:

  • Cut the cost of your debt. If you’ve been relying on credit cards throughout the pandemic, expensive interest is bound to catch up with you. A lower-interest debt consolidation loan can fold your balances into a single, more affordable payment — and help you find freedom from your debt sooner.

  • Become your own insurance adjustor. You may be overpaying for insurance by hundreds every month. With everyone staying home during the pandemic and driving much less, some car insurance companies have been giving customers price breaks. Not yours? Shop around for a better deal. Plus, you can save on homeowners insurance by comparing rates to find a less expensive policy?

  • Refinance your mortgage and slash your payments. Though mortgage rates have been rising in recent weeks, they're still at some of the lowest levels in history. Refinancing your current home loan could save you thousands of dollars over the next year. Mortgage tech and data provider Black Knight says 11.1 million mortgage holders could refi and cut their monthly payments by an average $277.

  • Find savings to "make your own" stimulus check. Make budget-friendly fun. Cancel streaming services and any other monthly subscriptions you're not using, and have a family games night. And, before you do any more shopping online, download a free browser add-on that will automatically scour for better prices or coupons.

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About the Author

Sigrid Forberg

Sigrid Forberg

Associate Editor

Sigrid’s current role is associate editor, and she has also worked as a reporter and staff writer on the MoneyWise team.

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