The Treasury Department will be sending out millions of checks beginning July 15 in the first wave of the new, expanded child tax credit. Around 39 million families, representing about 65 million kids, will be receiving payments, according to the IRS.
What is it:
The enhanced tax credit was created in March as part of the American Rescue Plan. For 2021, the maximum credit is $3,600 for children below 6 years of age and $3,000 for those between 6 and 17.
The money is being distributed in advance of 2021 tax returns being filed as six monthly installments. The payments, for those families getting the full benefits, work out to about $300 per month for children younger than 6 and $250 per month for children between 6 and 17.
There is no limit on the number of children who are eligible for the credit per family.
Who gets the full benefit:
The full credit amount is available to couples who file joint taxes and have adjusted gross incomes of less than $150,000, or individual filers who make less than $75,000. The credit phases out as tax filers make more money and is not available to those individuals who make more than $95,000 or couples who earn $170,000.
However, those not eligible for the enhanced child tax credit are still likely eligible for the regular child tax credit, which is $2,000 per child under the age of 17 for individuals who make less than $200,000 or couples making $400,000 a year.
The IRS has created a tool online to help parents figure out what is available to them: click here for their eligibility assistant.
How are payments sent:
The enhanced child tax credits will be sent like stimulus checks, for the most part, and about 80% of those eligible will receive the money as direct deposit in their bank accounts.
To check which account the Treasury Department has on file, or to change how to receive payments, use the IRS’ Child Tax Credit Update Portal.
Payments will be sent to eligible families beginning on July 15, 2021.
The payments are then scheduled on August 13, Sept. 15, Oct. 15, Nov. 15, and Dec. 15.
The second half of the credit will come to families after they file their 2021 tax return in April 2022.
Are monthly payments the only option:
Eligible families can choose to opt-out of the monthly payments, and instead receive the full portion of their enhanced child tax credit when they file their 2021 tax return.
To opt-out of monthly payments, head to the IRS’ Child Tax Credit Update Portal.