Child tax credit rolls out soon as monthly payments
Monthly child tax credit payments begin July 15; opt out available for those who use credit to offset tax owed
WILLIAMS, Ariz. — Some parents may be surprised to find a check from the IRS in their mailbox this week.
Those checks are from President Joe Biden’s American Rescue Plan that provides parents with earlier and an increased child tax credit this year.
The credit is a refundable tax credit of up to $3,600 per qualifying child under the age of 18. In 2021, this child tax credit could come sooner than in the past, in the form of monthly advance payments.
The first monthly child tax credit payments were set to go out July 15.
The plan increased the child tax credit from $2,000 per child to $3,000 per child for children over the age of six and from $2,000 to $3,600 for children under the age of six, and raised the age limit from 16 to 17 as of Dec. 31, 2021.
All working families will get the full credit if they make up to $150,000 for married filing jointly, or $112,500 for head of household. Single filers qualify in their modified adjusted gross income is under $75,000. The credit begins to phase out above those thresholds.
Advance child tax credit payments
The American Rescue Plan has made it so parents will get monthly checks over the second half of 2021 as advance payment on their 2021 child tax credit.
Monthly payments start in July. For the first time, people will receive the child tax credit in monthly payments. For every child 6-17 years old, families will get $250 each month, and for every child under 6 years old, families will get $300 each month
These payments will continue every month through December and then parents will get the rest of the money on their next tax return.
The 80 percent who get their refunds from the IRS through direct deposit will get these payments in their bank account on the 15th of every month until the end of 2021.
People who don’t use direct deposit will receive their payment by mail around the same time.
Consider opting out
While many families may need the money right now, others might want to opt out of the monthly payments so they don’t end up owing the IRS next year. In past years many families used the tax credit to offset taxes owed.
Some families may have to pay the money back in 2022 — for example those that are making more money this year than last year. In that situation, families may have to pay some of the child tax credit money back at tax time next year.
Also, if families have a child who turns 18 this year, they may not be eligible for the tax credit. That will be reflected on next year’s taxes, and whatever payments received may have to be returned to the IRS.
It is too late to opt out of the first payments set to hit accounts this week, however, families can still opt out for future monthly payments. The opt-out allows families to receive the tax credit when they complete their 2021 tax return.
Once a family opts out of the monthly payment, they're opted out for good.
The IRS will use the most recent tax return to determine who qualifies for the child tax credit.
For those who have completed tax returns for 2019 or 2020, or those who have signed up to receive a stimulus check from the Internal Revenue Service, they will get this tax relief automatically.
If families didn’t make enough to be required to file taxes in 2020 or 2019, they can still get benefits.
Low-income families with children are eligible for this tax relief — including those who have not made enough money to be required to file taxes.
To opt out or for more information, visit the child tax credit portal on the IRS website at irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.