Good news for parents: the child tax credit is changing for the 2021 tax year. By July 1, millions of eligible American families with children will start receiving monthly payments from $2000 to up to $3600 per kid, depending on their age and the annual income of their parents. In addition, the American Rescue Plan removed the minimum earning requirements for the 2021 child tax credit. Even if you do not have low or zero income but you’ve filed your tax return with the correct information,
the IRS will cut a check or send the money into your account.
What’s changed in expanded CTC?
Under previous law, most eligible parents could receive child tax credits of up to $2,000 per child. The newly enhanced credit increases the annual benefit per child as follows:
|Child ages 5 and younger||Max $3,600 each, with half as $300 monthly payments|
|Child ages 6-17||Max $3,000 each, with half as $250 monthly payments|
Who qualifies for the new CTC?
Eligibility determined based on parents adjusted gross income:
- Single filer – whose adjusted gross income is up to $75,000.
- Head of household – whose adjusted gross income above $112,500
- Married couple filing jointly – whose adjusted gross income above $150,000.
To qualify, kids must have a valid social security number and live with their parents for at least half the year. Also, parents must
provide more than half of their child’s financial support including food, utilities, education, clothing, and other costs.
How will the new CTC monthly payment work?
The IRS will set up an online portal for taxpayers to update their relevant tax data (such as notifying the government of the birth
of a child during 2021) in order to get the child tax credits and allow the IRS to make mid- year payments adjustments. According
to the Treasury fact sheet, “the Treasury Department and the IRS will carry out a sweeping public awareness campaign parallel
to its Economic Impact Payment campaign to reach all Americans who may be eligible for this financial assistance.”
According to the American Rescue Plan Act and the IRS, the child tax credit monthly payments will begin arriving on July 1 and
will continue until December 31, 2021. “This change will allow struggling families to receive financial assistance now, rather than
waiting until the 2022 tax filing season to receive the child tax credit benefit,” the agency stated. However, if parents prefer not
to receive a monthly payment, then they can claim the full credit when they file their 2021 tax return.