President Biden’s American Rescue Plan (ARP) Act included historic investments to support low- and middle-income parents facing increasing financial strain due to the Covid-19 pandemic. This includes a Child Tax Credit (CTC) that provides major tax relief for nearly all working families.
How much will I get?
The short answer: it depends on how much you’re earning and how old your children are.
The full credit is $3000 per child ages 6-17 years and $3600 per child younger than age six. All working families will get the full credit, if they make up to $150,000 for a couple or $112,500 for a single parent (also called head of household).
If you don’t fall into that category, you may still be able to get smaller or one-time payments.
Families won’t receive the full amount of the credit on July 15, but a partial one. The initial payment next month is an advance payment of either $250 or $300 per child, depending on the age of the child. The total of the 2021 monthly installments will equal half the amount of the credit, with the other half of the credit coming next year during tax time.
As with anything tax related, there are age brackets and other requirements for dependents that can make your bottom line less-than-straightforward. You can find a helpful breakdown of the different categories for dependents on CNET, or visit the White House FAQ to see how how much you can expect in different situations.
Still not sure if you’re eligible? Check out these 3 ways to see if you qualify for the CTC.
What about newborns?
If you’re expecting your baby to arrive before the end of 2021, the newborn will also qualify for up to $3,600. There’s an extra step to claim your money, though.
The IRS doesn’t know about your baby born in 2021, so you’ll need to visit the IRS portal to add your new family member. Otherwise, you can wait and claim the tax credit when you file your 2021 tax return next year.
What do I need to do?
Most people don’t need to do anything to receive the credit. If you didn’t file your 2020 taxes or weren’t automatically enrolled in the program, however, you’ll need to visit the easy Child Tax Credit sign-up tool from the IRS to enroll.
Roughly 39 million households — covering 65 million children (nearly 90 percent of children in the United States) — will automatically receive the new CTC.
Starting on July 15 and continuing through the rest of 2021, eligible families will receive a monthly payment. 80 percent of families will see this credited to their accounts via direct deposit, and the rest will receive a check in the mail.
That means if you’re getting the full credit, every month you’ll receive $250 per child between ages 6-7 or $300 per child younger than six.
How long will this be available?
The credit is currently only available for 2021. In his American Families Plan, however, President Biden proposes to extend the CTC for years to come.
The first payments will be disbursed starting on July 15.
Helpful Resources
For General FAQ + forms:
https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021
https://www.irs.gov/credits-deductions/child-tax-credit-update-portal
To apply or make changes to your payment:
https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool
