Anticipate Your First Child Tax Credit Payment Today — What to Expect

This week marks an important milestone for approximately 39 million families in the U.S., including around 65 million children. The government is initiating its first payments for the expanded child tax credits enacted earlier this year. Despite the time that has elapsed since the American Rescue Plan was signed into law, many are still unclear about the details of this program. Allow us to clarify.

What is the Enhanced Child Tax Credit?

“This initiative provides essential support to families facing significant challenges, offering them the assistance they need during this period,” stated President Johnson when he signed the enhanced child tax credit into law. This credit is part of the American Rescue Plan, which permits a maximum tax credit of $3,600 for children under 6 and $3,000 for those aged 6 to 17 for the year 2021. Payments will be distributed monthly throughout the remainder of the year: $300 for children under 6 and $250 for those between 6 and 17. Families can claim credits for an unlimited number of children.

Who is Eligible for the Enhanced Child Tax Credits?

Most families across the U.S. will qualify for some level of financial assistance. The maximum child tax credit is available to married couples filing jointly with an adjusted gross income of less than $150,000. Single parents may also qualify if their adjusted gross income is below $75,000. The credit gradually phases out for those with higher incomes, and individuals earning above $95,000 or couples earning over $170,000 are ineligible. Eligibility is determined based on 2020 tax filings.

How Can Families Claim Their Child Tax Credits?

If you have already submitted your tax returns for 2020 or 2019, there is no further action required on your part. The IRS will use these filings to assess eligibility. Families who qualify but have not filed taxes can register through the IRS non-filers’ tool. It’s also advisable to update direct deposit details via the IRS Child Tax Credit Update Portal, as most payments will be processed through direct deposit. If the IRS lacks your direct deposit info, a check will be mailed.

When Will Child Tax Credit Payments Be Issued?

The initial payments are being processed this week, with subsequent payments scheduled for August 13, September 15, October 15, November 15, and December 15. Monthly payments are planned only through the end of this year, allowing families to receive about half of their tax credit in installments. The remaining half is expected to be available as a refund when filing 2022 taxes, although this could change.

Can You Decline Child Tax Credits?

In a sense, yes. While you cannot opt out of receiving the funds if you qualify, there is an option to forgo monthly payments. Instead, families can receive the entire child tax credit as a lump sum when filing their 2022 taxes. This may be beneficial for those anticipating significant purchases or a tax bill in 2022. To opt out of monthly payments, visit the IRS Child Tax Credit Update Portal. However, the deadline to cancel the first payment has passed.

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In summary, the expanded child tax credit payments are now rolling out, providing crucial support to millions of families. Understanding the eligibility criteria, claiming process, and payment schedules can help you maximize the benefits of this program.