I wanted to share a few quick noteworthy updates on payment details for the new expanded Child Tax Credit in 2021 that was part of the American Rescue Plan legislation that was passed by Congress and signed by President Biden in March, which adds significant additional funding to the standard Child Tax Credit that many Americans are familiar with.
Date of Payment Details: the IRS and Department of Treasury announced that the expanded credit will begin being paid out as advanced monthly payments starting July 15 to eligible households. Payments will be made on the 15th of each month (unless the 15th falls on a weekend or holiday) throughout the rest of 2021 – 6 payments in total.
Child Tax Credit Amounts:
The 6 monthly Child Tax Credit payment amounts will total:
- $300: for children under age 6
- $250: for children age 6 through 17
This means that the total advanced credit amount delivered in 2021 will be:
- $1,800: for children under age 6
- $1,500: for children age 6 through 17
This will be half of the total amount paid out, with the other half being factored into 2021 tax returns. In total, the amount will equal:
- $3,600: for children under age 6
- $3,000: for children age 6 through 17 (was 16 in prior years)
The Child Tax Credit is now fully refundable in 2021, which means you get the credit even if owe zero in taxes for the year, and there is no earned income requirement.
Form of Payments: payments will be direct deposit, check, or debit cards (likely tied to how you’ve elected to receive tax refunds or other benefits from the feds in the past).
Eligibility: the IRS estimates that roughly 39 million households – covering 88% of children in the United States – are slated to begin receiving monthly payments without any further action required. There are some income limitations to the expanded portion of the Child Tax Credit that I discuss in the first link of this article, so check that out for full details.
Modifications: the IRS has created a new Child Tax Credit portal to allow taxpayers to modify form of payment and when they receive the credit payments.
More info: see the IRS release for more info.