On July 15, the savings accounts of parents across the United States got a little bit bigger as the first installment of the Child Tax Credit (CTC) was rolled out.
This tax credit, part of the larger COVID-19 relief efforts outlined in the Biden Administration’s American Rescue Plan Act, grants 36 million households monthly payments of up to $300 per child for the next six months.
Child tax credits are not a new thing. In fact, eligible parents already receive money from the government for each qualifying child with their annual tax refund.
However, this child tax credit bumps the amount being paid for each child and allows for parents to receive a partial advance on the credit that families normally collect on next year’s tax return. The goal of the CTC is to help families financially impacted by the pandemic catch up on bills and thereby strengthen the economy.
Here, we answer some of the most frequently asked questions about the Child Tax Credit, including who’s eligible, how much you’ll receive and if you need to claim it on your taxes.
Who is eligible for the CTC?
You must have a modified adjusted gross income of less than $75,000 as a single filer or $150,000 if filing jointly with a spouse. The interactive eligibility assistant is the best way for families to see if they qualify by answering just a few brief questions.
How much will I receive?
Eligible families are guaranteed payments of $300 per child up to age 5 and $200 per child between the ages of 6 and 17. The remainder of the CTC is claimed when you file your 2021 taxes early next year. Use this child credit calculator to determine your family’s benefit.
How will I receive payment?
The IRS will send the money via direct deposit for taxpayers who receive electronic funds. Others will receive paper checks. The IRS cautions that there may be a lag time of a few days to a few weeks to receive payments, which will be disbursed on these dates: July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15, Dec. 15.
Do I pay taxes on CTC payments?
No. CTC payments are not considered income.
Can I opt out of payment?
Some taxpayers who have had a change in qualifying circumstances or those who want to get a bigger tax refund in 2022 have asked if they could opt out of the monthly payments. The only way to opt out of payment is to visit the Child Tax Credit Update Portal.
Will the expanded CTC continue beyond 2021?
Right now, the Biden administration is pushing for the expanded tax credit to be renewed beyond 2021, but no decision has been made.
Where can I find more information about the CTC?
Visit the CTC Portal or check with your tax professional to discuss your family’s individual circumstances.
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