Enhanced Child Tax Credit Payouts to Begin
Families Can Receive as Much as $3,600 per Child
Starting in July, households across the US will receive monthly child tax credit payments as part of the American Rescue Plan enacted in March. Under the expanded benefits, a family can get a maximum of $3,600 for children under the age of six and $3,000 for those aged six to 17.
The credit will be distributed as an advance to 2021 taxes, paid out in monthly installments.
Those getting the maximum will receive $300 per month for each child under six and $250 for children aged six to 17. To receive the full credit, married couples filing jointly must not make more than $150,000. The tax credit phases out for individuals earning $95,000 or married couples earning $170,000 and filing jointly.
Direct Deposit Recipients to Be Paid First
The Internal Revenue Service began sending out letters to families who may be eligible for the tax credit this month. Those who will receive the credit do not have to do anything. The IRS is using 2020 tax returns (or 2019 returns for those who have not yet filed last year’s taxes) to determine eligibility. The IRS started an online portal for nonfilers to sign up for the tax credit. The IRS is also opening a portal for families whose situation may have changed, making them eligible for more of a credit. These changes could be something like a new baby or a decline in income.
Just like with past stimulus checks, the IRS will send direct deposits to those taxpayers with information on file. It will send paper checks to families who do not have their information on file with the IRS.
Timing of Payments
Households eligible to receive the payments should expect them on the 15th of the month unless it lands on a weekend or holiday. In that case, it will be paid on the closest business day to the 15th. The IRS scheduled monthly payments for the remainder of 2021. Tax filers will get the second half of the credit when they file their 2021 taxes next year.
Although the enhanced benefits are expected to expire in 2021, they may last longer if President Biden extends the program through 2025, as he has suggested, or if lawmakers are able to make it permanent. Either way, for now, about 65 million households will benefit from the program.
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