Reminder: Advance Child Tax Credit Payments Begin July 15
On July 15, about 36 million Americans will start receiving advance monthly checks from the IRS under the expanded Child Tax Credit. The bill, part of the President’s American Rescue Plan Act, increases the child tax benefit to $3,600 per child under age 6 and $3,000 per child between the ages of 6 and 17.
As we highlighted in an earlier post, the revamped tax credit is also fully refundable — welcome news to lower-income parents who normally wouldn’t benefit. Single parents with annual income up to $75,000 and joint filers making up to $150,000 a year qualify for the full portion of the credit.
Recently, the IRS unveiled an online tool to make it easier for families who didn’t file an income tax return in the last two years to register for payments. However, eligible families who filed a return in 2019 and/or 2020 should not use this tool. Instead, the IRS will use your latest income tax information to determine your eligibility and issue payments.
In either case, registered families who qualify will receive half of the increased child tax credit on a monthly basis ($300 a month for children under 6 and $250 a month for children between the ages of 6 and 17), from July through December, with the remainder to be claimed on your 2021 tax returns.
You may opt out of receiving the advance payments through the IRS Child Tax Credit Update Portal if you’d rather receive a lump sum in the spring of 2022. However, we recommend you don’t opt out of the monthly payments if you expect your income to increase in 2021, as the credit is based on the most recent tax return filed.
If you qualify for a child tax credit, look for your first payment in mid-July by direct deposit (if the IRS has your current online banking information) or mail.
If you have any questions about the Child Tax Credit, please contact us!
Stay safe & healthy,
The CJBS Team