65 million kids are expected to receive extended child tax credits from the government this week. Here’s everything parents need to know
This is a big week for some 39 million families across the U.S., including the estimated 65 million kids who are a part of them. This week, the U.S. government is sending out its first payments for the extended child tax credits it passed back in March. But despite the several months that have passed since President Joe Biden signed the bill for the American Rescue Plan that included the tax credits, many Americans still don’t fully understand the program. We’re here to help.
What is the enhanced child tax credit?
“This plan gives those families who are struggling the most the help and the breathing room they need to get through this moment,” President Biden said in March when he signed the enhanced child tax credit into law.
The credit is part of the American Rescue Plan. For 2021, it allows for a maximum tax credit of $3,600 for kids younger than age 6, and $3,000 for kids between ages 6 and 17. The credit will be distributed in monthly installments for the rest of the year: $300 a month for families with kids younger than 6, and $250 a month for families with kids 6-17. There is no limit on how many children a family can receive child tax credits for.
Who qualifies for the enhanced child tax credits?
Most American families will receive some money. The maximum child tax credit is for married couples with children who file taxes jointly and have an adjusted gross income less than $150,000. Single parents also qualify, if their adjusted gross income is less than $75,000. The credit phases out for families who make more than that, and individuals who earn more than $95,000 and married couples who earn more than $170,000 will not qualify for a credit. Income is based on 2020 income tax filings.
How do families claim their child tax credits?
If you’ve already filed your taxes for 2020 or 2019, you don’t need to do anything more. The IRS will use 2020 tax filings, or 2019 if 2020 taxes have not yet been filed, to determine families’ eligibility.
Families who are eligible for child tax credits but have not filed taxes for either year can sign up through the IRS non-filers’ tool.
Families may also want to update their direct deposit information via the IRS Child Tax Credit Update Portal, as most of the payments will be sent to Americans via direct deposit. If the IRS doesn’t have direct deposit information for your family, it will mail you a check.
When will child tax credit payments arrive?
The first payments are going out this week. Future payments will be made on Aug.13, Sept. 15, Oct.15, Nov. 15, and Dec. 15.
Monthly payments are only scheduled through the end of this year, which means families will be able to collect about half their tax credit in installments. Currently, the plan is for families to collect the other half of the child tax credit as a refund when they file their 2022 taxes, but that may change in the future.
Can you opt out of child tax credits?
Sort of. You can’t opt out of receiving the money if you qualify for it, but you can choose not to receive monthly payments, and instead get the full child tax credits as a lump sum when you file your 2022 taxes. This might be a good choice for families who need to make a major purchase, or who are expecting a tax bill in 2022. To opt out of monthly payments, visit the IRS Child Tax Credit Update Portal. It’s too late to cancel the first payment. The deadline to opt out of the August payment is Aug. 2.