WASHINGTON — As part of the pandemic relief package Democrats passed earlier this year, the Child Tax Credit will give financial relief with automatic monthly payments starting in July.
The Child Tax Credit was created as a benefit to help families who are raising children. The CTC in 2020 was $2,000 per child and was expanded up to $3,600 for children under 6 and to $3,000 for children 6 to 16-years-old, while also adding 17-year-olds to the $3,000 credit. The White House said all families will receive the credit, including low-income families that didn’t qualify for it in the past.
However, it's important to remember if you elect for the advance child tax credit payments starting July 15; you will lose that amount from your Child Tax Credit on your 2021 taxes. For example, if you accept the advance payments, and you have one child under 6, then you would receive $300 a month for six months. Then on your taxes next year, your child tax credit applied would be $1,800.
ABC Action News has a full Q&A below about all the details of the Child Tax Credit expansion and how it will impact you.
- Question: Who is eligible for the Child Tax Credit?
- Answer: Couples making less than $150,000 a year and single parents (also called Head of Household) making less than $112,500 will qualify for the additional 2021 Child Tax Credit payments. There are also other additional income levels for more distribution, details below.
- Question: How will the payments be distributed?
- Answer: The increased payments will be broken up into monthly payments of $300 for children ages 6 and under, or $250 per child ages 6-17. The payments will only cover the first half of the Child Tax Credit. The remainder of the credit will be given to taxpayers when they file taxes in April 2022.
- Question: What do I need to do to make sure I receive my payments?
- Answer: If you filed taxes this year, last year, or signed up for Economic Impact Payments (aka: stimulus checks) using the IRS’ non-filer tool last year; the IRS will automatically send payments. If you didn’t file taxes this year, last year, or sign up for stimulus payments, you can still sign up for the child tax credit payments.
- Question: When will I start receiving my payments?
- Answer: People who receive payments via direct deposit will get their first payment on July 15. After that, payments will go out on the 15th of every month, except in August which will go out on the 13th. Checks will also be sent to those who haven’t provided bank account information around the same time.
- Question: How much will I receive in Child Tax Credit payments?
- Answer: It’s a tiered process to determine how much each family will receive, all based on your income level.
- These people qualify for the full Child Tax Credit:
- Married couples with income under $150,000
- Families with a single parent (also called Head of Household) with income under $112,500
- Everyone else with income under $75,000
- These people will qualify for at least $2,000 of Child Tax Credit, which comes out to $166 per child each month:
- Married couples with income under $400,000
- Families with a single parent (also called Head of Household) with income under $200,000
- Everyone else with income under $200,000
- Families with even higher incomes may receive smaller amounts or no credit at all.
- Question: Can I opt out of monthly payments and receive my full Child Tax Credit when I file my taxes in 2022?
- Answer: The IRS says you can opt out of the monthly payments and receive the full credit next year. To do so, go to the IRS Child Tax Credit Update site and opt out.
- Question: Will receiving the automatic payments impact any of my other government benefits like SSI, SNAP, TANF, or WIC?
- Answer: No, the IRS said Child Tax Credit payments are not considered income for any family and will not impact other federal benefits.
- Question: Will I keep getting the expanded credit amounts and the advance payments next year?
- Answer: According to the White House, the American Rescue Plan enacted the changes only for this year. However, President Biden and many Congressional Democrats have said the increased Child Tax Credit and advanced payments should be extended into future years.