Rebeca Ibarra: It's The Brian Lehrer Show on WNYC. I'm Rebeca Ibarra, host of WNYC's Consider This and a host in the WNYC newsroom, filling in for Brian Lehrer, who has been on vacation this week. Coming up on the show today, we'll talk about the pandemic's effect on traffic and also whatever happened to congestion pricing? Plus, the Biden administration's plan to reverse some Trump era deportations. Listeners, to wrap up today's show, we'll want to hear your reaction to a conflict at ESPN that probably has happened in just about every industry, where one on-air host implied her colleague got a prized job just because she was Black.

To start, have you checked your bank account today? If you have children under 18, then perhaps you found a few hundred extra dollars in it. That's because starting today, millions of American families will receive as much as $300 a month per child through the expanded version of the Child Tax Credit Program. Those payments will come for the next six months. Experts estimate that the approximately $100 billion paid out to families will cut child poverty in half. As promising as that notion may be, the expanded Child Tax Credit Program expires in just one year. The rollout and how smoothly or bumpy it goes in the coming weeks could help or hinder Democrats' hope to extend it.

First up today, we wanted to address what those bumps could look like, and answer your questions about eligibility and how to access your money if you and your child are entitled to it. With us is Michelle Singletary, personal finance columnist for The Washington Post and author of the new book, What To Do With Your Money When Crisis Hits. Hi, Michelle, welcome back to WNYC.

Michelle Singletary: Oh, thank you for having me.

Rebeca: Great to have you here. Okay, so big picture, what are these payments exactly, the payments that should be hitting people's bank accounts starting today?

Michelle: They're child tax credits. Typically, people would file for these credits when they filed their return. Because of the pandemic and families still struggling, the Biden administration said, "Let's send these payments to folks in advance of next year." That's what people are going to be receiving. The credit was developed or created to just help struggling families make ends meet. From July until December, families will get either up to $300 for kids, infants to 5, and then from 6 to 17 up to $250 a month, for the next 6 months.

Rebeca: Got it. July through December, and do most people need to take action to receive this credit or this money?

Michelle: Most people don't have to do anything. If you filed a 2019 or 2020 tax return, you'll get the payments automatically. If you gave the IRS banking information, they'll deposit it right in your account. In fact, many families started to see the pending money in their account on Wednesday night. Today, Thursday, the 15th, the money should be posted. If you didn't file a tax return because maybe you didn't make enough, you needed to use, or you need to use what's called a non-filers tool at irs.gov. That's basically a scaled down tax return that allows the IRS to know who has children in that age range who are eligible for this money.

Rebeca: Got it. Then what's the maximum amount of money a family can receive from this tax credit? Then at what income level do payments start to phase out?

Michelle: The payments start phasing out after $7,500 for single taxpayers. It's $112,500 per head of household, and $150,000 for couples filing jointly. After you get over those limits, it starts to phase out, $50 for every $1,000 over that threshold. Really though, most American families are going to qualify for the child tax credit.

Rebeca: Listeners, do you have any questions about these child tax credit payments? Maybe you had a child in the past month or maybe you're pregnant, you're wondering, will you receive a payment for those new additions to the family? Maybe, you're experiencing homelessness and don't have a home address, how will you get those checks? Perhaps you have a question about whether to opt out of monthly payments, and receive the money in full next year? Please call with your child tax credit payment questions for our guest, Washington Post personal finance columnist, Michelle Singletary, the number, 646-435-7280.

We also want to hear from you about what you want to do or what you plan to do with these checks up to 300 extra dollars a month per child. What will that mean for you and your family? What will you use this money for? The number, again, 646-435-7280. Michelle, as a personal finance expert and someone who writes about families at all income levels, what do you think when you hear that statistic that these payments could cut child poverty in half?

Michelle: I think they're right on point. I think because there's so many have have-nots in this country. There are many people who can't fathom that $300 a month, or even $250 a month is going to make that big a difference, but it does. It allows families to put food on their table, buy diapers, or catch up on rent payment. There's so many families who even before the pandemic, were living, not on the edge, but over the edge. They weren't living paycheck to paycheck because they didn't even make it to that point. This is really key, and what's so brilliant about this, is that they're getting these payments in advance.

Oftentimes, when it comes to the tax system, many people are so scared of, owing the IRS, that they over withhold and they wait for those yearly refunds, that lump sum payment, but they need the money on a monthly basis. For example, they've got credit card debt, they can reduce that debt, or pay bills as they go along, instead of waiting for that lump sum and there's a mentality with a lump sum payment. You think of it as a windfall, and sometimes people may not necessarily use it the best way, because they think it's like extra money when it really could be used to catch up on stuff.

Rebeca: This program passed as part of his stimulus package with unified Republican opposition, basically, and political commentators have posited that opponents to these payments will be looking for issues or payment glitches in the coming months as reasons not to extend the program. Do you worry that we'll see some bumps this week and next? What challenges do you foresee with this rollout?

Michelle: I've been reporting on the rollouts from the stimulus payment when they first began last year and there were a lot of glitches. Now, having said that, the IRS did deliver tens of millions of dollars to families with no issues, but there were many families who haven't gotten the payment and still haven't gotten the payment. Then the portals, the tools that they created, for example, the non-filers tool, had a lot of issues. I suspect that this rollout won't be without glitches. The IRS is under seized, they're underfunded. Now, they've been underfunded for years by the Republicans because of all the political fighting going on, so their technology is not up to date.

Now, think about it, the IRS is collecting most of the money that runs the government, then they three rounds of stimulus payments, and now monthly payments. This is the first time they've ever done this, monthly payment to millions of people. They've got to reach people who are unbanked or who don't file taxes, which is the families that need this money the most. You can imagine putting all that into the stirring bin, into the pot, it's creating a lot of issues though with the IRS. You can't get them on the phone if there are glitches. It's a little nuts over there. Some of it, management, but a lot of it funding.

Rebeca: As you said, the stimulus payments that people received in the last year acted as a practice run for these payments. You talked about the technical and logistical bumps, any other major takeaways from the rollout of those stimulus checks in the past year?

Michelle: We have seen that the stimulus payments lifted families up, that it gave them a breathing room, and it really illustrated how tenuous families are financially, even before the pandemic. I think it is showing that we need to do more for families. Now, I get that a lot of people are like, "Well, it's just more welfare and the government shouldn't be giving people money. This is going to create a system where people won't want to work." These are people who are saying that, who've never actually worked with families, or work with people who are unemployed.

I would say most Americans don't want to sit back and just collect money from the government. They want to be productive, they want to show that productivity to their children, but if you can't feed your kids, why are we saying, "Well, just tough luck. Let them pull themselves up by the boot strap." They can't eat that boot, come on. We need to help families.

Rebeca: Let's go to some calls, shall we? We have Asia in Queens. Asia, thank you so much for calling to WNYC. What's your question or comment?

Asia: Hi, good morning everybody.

Rebeca: Morning.

Asia: Thank you for taking my call. I was just asking, I just would like to know, if someone has a child but they do not claim them on their taxes, are they still eligible to get that tax credit or child credit that they're offering?

Michelle: Let me ask you, Asia, when you say they have a child, so what do you mean they have a child? What does that mean?

Asia: Basically, I have a child, but we're going through a custody battle. My son's father temporarily has custody of my son. No order is finalized as far as who's going to be the custodial parent, but he is a temporary custodial parent.

Michelle: If he claims your son or claimed your son on his 2020 tax return, then he will get the tax credit. Is that the case that he claimed him for 2020?

Asia: Yes.

Michelle: Then he will get, your ex, or your partner, your child's father, will get that. How old is the child?

Asia: My son is 13.

Michelle: 13, so he'll get the $250. If he falls in the income range that I mentioned earlier in the show, then, yes, he will get it. Now, the good news for you is that if you end up getting custody or shared custody, and maybe you guys are going to split the dependencies, like you take him one year, the child's father takes the next. If you claim the child for 2021, you can get those payments when you file your 2021 tax return next year.

As you're negotiating, you could do that, and I would suggest that you do that. Say, "Okay, you took him for 2020." If you are providing care for the child throughout the year, then you can then claim him for 2021. Now, if that happens, your ex will have to pay back that money. That's the downside, so I don't know what kind of relationship you have, if you're in a battle, probably not great, but that's something that you need to work out so that you determine who gets to claim the child. Well, whoever claims the child, that's the person that will get the tax credit money.

Asia: I just really wish that in situations such as my own, that maybe a bank account can be opened for the child, in the child's name, and the income tax credit, not just the income tax credit, but what they're getting starting today, if they can just put that money into the bank account for the child, so that can go towards college funding, or further schooling after high school, or however the child chooses to use it when they are of age.

Michelle: I see the reasoning behind that, but think about this Asia, when you're raising a child, you have monthly expenses. Those expenses need to be taken care of. While, yes, I agree that we ought to have a system that helps kids go to college, you and your ex, or parents out there need that money on a monthly basis. The money is for the child care, but not the child particularly, so the money is supposed to help with rent, or food, or clothing, or camp, all those kinds of things, those costs that happen throughout the year.

I get this a lot, especially with parents who have had child support, and they've figured out, "Well, it's the child's money." It really isn't. It's the child's money, it's the parents' money to take care of the child.

Rebeca: Asia, thank you so much for calling into the Brian Lehrer Show, and I wish you the best of luck. Michelle, you bring up a great point about how to use this money and whose money the is. About one million filers have already opted out of these monthly pre-payments according to administration officials. When is it a good time or idea to opt out of monthly payments and just receive the money in full next year? Is it ever?

Michelle: Yes, well, this call from Asia is a perfect example. When you have families that are not intact, and I don't mean that in a derogatory way, if you have custody and you, alternating when you claim the child, and 2021 is not the tax year, but you're going to get the payments based on your 2020 return, you may have to pay that money back. You really need to think about your tax situation, or perhaps, a child was with a parent, the parent has some issues, and now the child is going to be living with a grandparent or another guardian, who then would be able to claim them on their 2020 tax return? You need to opt out.

I think what people don't realize is that this is an advanced credit, so while the IRS is using your 2019 or 2020 tax return, it really is based on your 2021 income situation. They're giving it to you in advance. If your situation changes, for example, let's say, 2020 was awful, you lost your job, things were horrible, and you would qualify, but now, you're back to work, you're making even more money, and you wouldn't qualify for it, or you qualify for a lesser amount. You want to opt out. You don't want to owe the IRS next year. You want to really come out even, so the whole idea is that you don't really owe much, but you don't get much back. That's the ideal situation.

Rebeca: Got it. Let's go to another caller. We have Deborah in Harlem. Deborah, thank you so much for calling WNYC. What's your question?

Deborah: Hi.

Rebeca: Hey, Deborah.

Deborah: Hi. Sorry. My child, he had a new baby. She was born in March of last year. The stimulus checks, they didn't get allotment for her. They filed their taxes late, recently, for this year. Is there a way that they can let them know that they achieved this?

Michelle: This is going to be the situation for the parents of that child. The IRS is backlogged. About 35 million returns are still in the process of being looked at, and if you filed late, you got to get behind in line. That's why they haven't gotten the stimulus payments. They will eventually get them. The problem is if they haven't processed that 2020 return, they may not get the child tax credit, but the good news is that if there is not a processed 2020 return in the system, the IRS will default to the 2019 return, but as you say, the kid was born in 2020, so they're going to probably not get the payments right away, unfortunately.

Because if they defaulted to 2019, the kid wasn't born yet, but they still will get the payment once the IRS processes that 2020 return and it still could get processed this year. If for some reason it doesn't, they can claim that tax credit when they file their 2021 return next year.

Now, I found this out yesterday. I did a live online chat with Ken Corbin from the IRS. If they process that, say they process it in August or September, they will go back and pick up those payments that those parents were supposed to receive going forward. For example, let's say the payment starts in September, from September to December, they will add what they didn't get, the back payment, into the payments going forward. They'll divide them by the number of months that are left in the six-month period. I know that sounds like a lot of stuff, but the good news is that if they process the return, they will get all of that advance money before the end of the year.

Rebeca: Deborah, thank you so much for calling. You're listening to the Brian Lehrer show on WNYC. I'm Rebeca Ibarra, filling in for Brian today. My guest is Michelle Singletary, personal finance columnist for The Washington Post. We're going to take a quick break, and when we're back, more of your calls.

[music]

Rebeca Ibarra: It's The Brian Lehrer Show on WNYC. I'm Rebeca Ibarra, a host in the WNYC newsroom and the host of WNYC's Consider This, filling in for Brian. My guest right now is Michelle Singletary, personal finance columnist for The Washington Post and author of the new book, What to Do with Your Money When Crisis Hits. We're talking about the child tax credit monthly payments which start today. That's right, folks, check your bank account. Michelle, I want to go to another caller, Ruth in Queens, because she has a question that several of our callers have. Ruth, thank you for calling WNYC.

Ruth: Thank you for taking my question. My name is Ruth, and I have a 17-year-old son. He turns 18 at the end of November, and this would be great, but I think I heard on the radio recently that I should not accept this payment, I should return it, I should opt out or whatever it is I'm supposed to do, so that's my question. What should I do?

Michelle: Typically, the child tax credit is up to age 16. For the 2021 tax season or tax year, they upped that to 17, but here's where it's not good news for you Ruth. If your child turns 18 anytime during this year, they do not qualify for that child tax credit. Unfortunately, you should not get it. Now, if for some reason they picked up your 2019 return, you might get it, but I talked to the IRS yesterday, and did you file your 2020 return or 2019 return?

Ruth: Yes, I did.

Michelle: Yes, so they have the birth date of your child. They know that, I think you said it's a boy, that he turns 17 this year, I mean 18 this year, so they should not be sending you payments anyway. They'll look at your return and say, "Oh, he's turning 18 this year, he's not eligible for the payment," and you shouldn't get a payment. If for some reason you do, you do want to go in and opt out right away because you'll owe that money back next year. Now, if you've got a lot of deductions and things like that, it might even out. If you're not sure about that, you definitely want to opt out if you do get a payment for that child who turns 18 anytime during 2021.

Rebeca: Thank you so much for calling Ruth, and Michelle, there are several questions that a lot of people have. Let's go through some of them. What happens if I give birth next month? Am I able to get payments starting then?

Michelle: The good news is that one of the tools that the IRS created, if it works the way it's supposed to, you can go in and update your information that the IRS has on you. You can update your banking information. You can update, "Hey, I had a kid," and put that in. Depending on when you let them know, your payments will start, but you've got to have a social security number for that child. That usually doesn't take too long, however, the Social Security is backed up like everybody else because of the pandemic.

Whenever you find out, say you have a kid in August, and you don't get the social security number until September. Then you've passed that deadline where you can let the IRS know, make a change, any time before December, you can then get all of those payments you would do back to July, because the kid was born in 2021. Children born from now until the end of the year may still be eligible to get that back money. By December 31st, if the money isn't issued to you, you'll have to wait until you file your return, your 2021 return next year.

Rebeca: Got it. We have another question from Twitter from Paul Moehringer, I think this is similar to Deborah's, but I am not the expert here, so I'm just going to ask the question, Michelle, and then you can decide if you've answered this already. Paul writes, "I had my first child last year, and I'm still waiting on my federal tax return and final stimulus check. Will I get this or will I have to claim the credit on my taxes next year?" That's the question from Paul.

Michelle: If this child was born in 2020, and they haven't processed your return, you're probably going to have to wait unless they process it before the end of the year. That is right, because if the IRS is going to default to 2019, the kid wasn't here, so they don't know that you have a kid. If your return is stuck in the processing queue, and there are millions that are stuck in the processing queue, unfortunately, there is nothing you can do about it until that comes out of that queue and it's processed.

As I say, the good news is from July to December, you have a chance to catch up on those payments if they process your return. I know people need the money right now, and they're like, "God, what's happening?", but you still can get it when you file next year. I know that's not the news most people want to hear, but that's the fact of the matter.

Rebeca: Let's go to Deirdre from Manhattan. Dierdre, am I pronouncing your name correctly?

Deirdre: Yes, you are.

Rebeca: Beautiful.

Deirdre: That's the correct pronunciation.

Rebeca: Wonderful. What is your question or comment for Michelle?

Deirdre: Thank you, Rebeca and Michelle. My question is you did mention it briefly about people who don't have bank accounts, but I understand that that's very common, especially among the poorest families. I see in my neighborhood bank checking places where people are already losing out on the stimulus, because that's where they have to go. Can you explain a little bit more how people without a bank account are going to receive this money?

Rebeca: Thank you so much for your call.

Michelle: Sure. That's a great question and very empathetic. I appreciate that Deirdre. If you don't have a bank account, then the IRS will send you a check in the mail. Who wants to get a check in the mail with the postal service slowdown? You'll still get the money, it's just going to take a little while. I agree that many families have chosen not to have a bank account because they're worried about overdraft fees, and issues with the bank.

Please, if you can, open up a bank account and there are many banks that will allow you to open up a simple checking and savings account with no fees if you have direct deposit and some other things. In fact, the FTC, FDIC has a whole campaign to try to get the unbanked banked. I did a column about that. If you go to the washingtonpost.com, type in my name, Michelle Singletary, and then FDIC, you'll see a column where I have information on how to get banked, but the families won't miss out on the payments. They'll just have to wait for them to be mailed. I really try to encourage families to get a banking relationship. Credit unions offer no-fee banking, so there are ways to do that.

Also, the program that the FDIC is running was connected to banks who participate in the program. They set it up so that you can't have overdraft, because that's really one of the biggest fears why the unbanked doesn't bank, because those things can add up, $35, $37, but the program, I think it's called Bank One, will allow you to set up an account, and then it prohibits the banks from processing charges where you don't have enough money in your bank account. That's a safety net, but the families will still get the money. They'll just get them in a check.

Rebeca: Listeners, we're going to tweet that column that Michelle just mentioned from the Brian Lehrer Twitter account, so you can check it out right there, it'll link to it. We're talking about people who don't have bank accounts, but there are a lot of people who are also experiencing homelessness, or who are moving around a lot, and don't have a permanent address. What happens to those people? Can they still qualify for payments? What happens?

Michelle: They absolutely can. What a great question. If you're homeless, you can still file your return and you put in the address, let's say a relative, maybe you're at a shelter, you can put in the shelter's address. Maybe you're working with a community organization, you can put their address. The IRS has set up a system so that those who are without a permanent home can still get the payments delivered to them. That's why it's key to have a bank account, so that if you have a bank account, even when you're homeless, then you can get those payments, and you don't have to worry about that check coming into a community center or wherever you might be receiving help, but then it has to be processed through and maybe takes even a little longer.

You can still work with the institutions. Those institutions that I told you as part of the program, are also working with families who don't have permanent residence so that they can set up those bank accounts.

Rebeca: I think it's also important to mention the people who were left out from the stimulus payments, which are undocumented workers. Now, some of our listeners might be surprised to know that a lot of those people who work still pay taxes, but they weren't eligible for these payments. Has any of that changed and will they be able to participate in this or not?

Michelle: That's still a problem though. You have to have a social security number, you have to be a citizen. There are just restrictions to getting payments. You have to actually live in the US, because there's some folks that live in other countries. There's still restrictions on that, unfortunately. I agree with you, they pay taxes, and so they're paying into the system, but for right now, no, they would be shut out from the payment.

Rebeca: Let's do another commonly asked questions, which is what if I get a raise mid-year, will the IRS adjusts the amount of money I'm receiving in this monthly payments or will I have to pay it back when I file my taxes next?

Michelle: They won't be able to adjust it because it's going to be-- again, this is an advanced credit based on your-- so the eligibility for income ranges are based on your income for 2021. The IRS has no way to know that you've gotten a raise mid-year so this is where you're going to have to figure out, and you should seek help from a tax professional. You can just hire somebody for an hour or two and say, "Hey, can you just help me go through and make sure I don't have to pay this money back," but just look at the threshold. What you could do is that there is a estimator on irs.com. It's called the Child Tax Credit Assistant, and it'll help you estimate whether or not you're eligible for this payment.

Put in the income that you would be earning for 2021 and see if you qualify. If you don't, then you do want to go in and opt out so that you don't owe the IRS next year. You can predetermine whether or not you'll be eligible, because again, remember they're going to be using your 2020 return. You may make considerably less money last year and then would qualify, but not so much this year. That will help you determine whether you need to opt out and there's an opt-out schedule on irs.gov. They have a tax credit FAQ page, and it tells you when you need to opt-out before they send the next payment so you've got some time. You have until, I think August 2nd, to opt out for the August payment, so you want to do that right away.

Rebeca: Michelle, any final thoughts or anything you really think is important to mention about the tax credit that you think I haven't asked or people haven't asked?

Michelle: Think about the people in your lives that maybe haven't filed taxes because they don't earn a lot. Your cousin, your sister, an auntie. You go to church, and you know that there's some families who are low income and maybe not file for taxes, please, please get the word out. There are millions and millions of people who are eligible for these advance payments, and also eligible for the stimulus payment still, that need this money, but maybe think, "Oh, I don't get it, because I don't file a tax return." Just spread the word in your community and really just also think about this.

This isn't exactly about the tax credit. If you are doing well, you were okay during the pandemic, and then some, you were able to save a bunch of money, think about the people in your life that you can help. $300 or $250 a month means a lot to a family, but maybe you can pay their utility bills, maybe you can pay their rent for a couple of months. Just think about the help that you can assist. The government can only do with so much. I mean, my husband and I have done that in our own personal lives. We looked around to see who needs help, and we've just been sending money to people, I really encourage you to do that.

This will answer that question too, that people will go, "Oh, the government shouldn't be handing out welfare," Okay, government can't do everything, but maybe you can help. I think it's very important that the government is doing this to help lift people up, but let's also, those of us who have more, because to whom much is given, much is required.

Rebeca: Michelle, before I let you go, I want to go to one more caller, we have Lindsay in Jackson Heights, who's actually going to share a bit of a personal thing she's going to do with the money. Lindsay, thank you so much for calling WNYC.

Lindsay: Hi, thanks. This is a great segment. I just wanted to share my own personal story. I've got two kids, 11 and 8. When they were little, we racked up untold, I should know the figure, but tens of thousands of dollars in credit card debt just because the expenses getting so high, and you're out of the workforce for a bit. We just actually last month, paid that off and the debt we had, and in part, thanks to some of the stimulus money we got last year.

I was thinking how much this payment, this would have smoothed things over at that time. We're doing okay now, and we plan to, like you were saying, share some of this money with friends and neighbors, and others just save for college. I was wondering if you see any signs that credit card companies are nervous about this, thinking how this might cut into the need for borrowing?

Michelle: I wouldn't say they're nervous, but they have definitely noticed. In fact, the Federal Reserve looked at what people were doing with this money and found out that people were doing exactly what you did Lindsay, which was a good thing, paying down debt. Now, some people think, "Why are we doing that?" Well, that means that you now have freed up money to make sure your household is stabilized. Now, don't rack those up again, only charge what you can pay off the next month, and then now, build financial stability for your kids. Then, absolutely start saving for college so you don't have to borrow, nor they don't have to borrow.

You live in New York, we have some great colleges in the New York area. If you don't have enough to send them up to a four-year university, send them to the community college for two years. Then they can transfer to the community college, and let them stay home instead of staying on campus to cut those costs. You're now on the path to financial stability, I want you to stay on that path, I want you to not get back in debt. Now, you're doing exactly right, thinking forward because the more stable you are, the less you have to rely on the government, the less taxes we all have to pay. That's a good thing for everybody. Kudos to you for taking charge and getting rid of that debt.

Rebeca: We're talking about college, but our producer, Mary, says that daycare costs are just so high for little ones here. That's a big expense, too.

Michelle: So crazy. Yes, I've got three kids in their 20s, and I am so glad they're not, don't need it anymore. So much money on daycare. Now, if I could just get them out of my house and off my payroll, but they're on their way. I'm actually happy my oldest is living with us. I think that's such a great thing. We actually encouraged her to move back home, and we actually want her to stay for several years to save money, so that when she does move, she could probably buy her house outright. I want her to say like 7 to 10 years. She's like, "You are nuts."

[laughter]

Rebeca: Take your mom's advice, though, take Michelle's advice and save up.

Michelle: Exactly. I'm only a little bit crazy, so you only have to deal with it for just a little bit, but her dad is great, so that's good.

Rebeca: Well, we're going to have to leave it there with Michelle Singletary, personal finance columnist for The Washington Post and author of the new book, What To Do With Your Money When Crisis Hits. Thank you so much for coming on today, Michelle.

Michelle: Oh, you're so welcome.

 

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