IRS Announces Expanded Child Tax Credit Payments are Coming in July 2021
One of the major components of the American Rescue Plan is the enhanced Child Tax Credit. This credit is a refundable tax credit of up to $3,600 per child. Not only it is refundable, but Congress requires the IRS to provide advanced, upfront payments of this credit in 2021. This means that eligible families will receive a monthly payment of the credit every month for each child beginning in July.
The credit amounts will be reduced for incomes of more than $150,000 for married taxpayers filing a joint return, $112,500 for heads of household and $75,000 for all other taxpayers.
Many families won't have to do anything; the IRS will send a check, or if there is a bank account on file, automatically deposit the money. The IRS will determine the 2021 monthly payments based on information reported on an eligible family's earlier income tax returns. The IRS has also announced that it will open an online portal for those families whose income is so low that they don't file income tax returns (e.g. the married filing jointly couple making less than $24,800) such that they can request payments.
Awareness of the credit is important: it is a significant benefit to families with children. The IRS estimates that roughly 39 million households – covering 88 percent of children in the United States – will receive monthly payments.