On July 15, roughly 39 million households around the country, covering some 88 percent of the nation’s children aged 17 and younger, will get their first monthly payment from the expanded new Child Tax Credit from the American Rescue Plan. The launch date was announced by the U.S. Department of the Treasury and Internal Revenue Service (IRS) earlier this week.
The one-time Child Tax Credit expansion for the 2021 tax year will give eligible parents $300 per month for each child under age 6, and $250 for each child ages 6 to 17, including children who turn age 17 in 2021.
Starting in July, the IRS will start sending payments on the 15th of each month, unless it falls on a weekend or holiday. Before the American Rescue Plan, taxpayers couldn’t claim the credit until they filed their taxes. Households will receive the monthly CTC payments through direct deposit, paper check or debit cards.
Most taxpayers won’t have to do anything to receive their payments, but Treasury and the IRS say they’ll be conducting outreach to make more more families aware of their eligibility.
The IRS does urge people with children to file their 2020 tax returns as soon as possible to make sure they’re eligible for the correct Child Tax Credit amount and any other tax credits they’re eligible for. Filing electronically with direct deposit also can speed refunds and advance payments of the child tax credit.
Who is eligible?
Prior to the American Rescue Plan the amount of the Child Tax Credit was up to $2,000 per qualifying child under the age of 17 each year. The increased amounts ($3,000 ages 6-17/$3,600 under 6) will be phased out for incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.
by: Sarah Hudacek, AOF Policy Assistant