Child Tax Credit Payments Up To $3,600 Each: Here’s What To Know
The Biden Administration’s $1.9 trillion COVID-relief bill includes a powerful child tax credit that could help 50% of affected kids rise up out of poverty.
How much will I receive, and how will I get it?
Under the American Rescue Plan, families could receive up to $3,600 per child, paid in monthly installments and split between 2021 and 2022. The measure determines eligibility based on children’s ages and their parents' incomes.
(via CNET): If paid out monthly, the payments would be up to $300 per month for each qualifying child age 5 and under, and up to $250 per month for each child between the ages of 6 and 17. Note that this amount phases out for those with higher incomes -- for single people earning more than $75,000 per year, heads of household earning more than $112,500 per year and married couples earning more than $150,000 a year.
So if you qualify for $3,000 and you have one dependent, you'd get an estimated $250 per month from July to December, for a total of $1,500. You would then need to claim the rest of your child tax credit amount when you file your 2021 taxes next year (2022).
CTC monies will likely be distributed in the same way as your economic stimulus money, whether that’s direct deposit, paper checks or EIP debit cards.
When will I receive my CTC funds?
The American Rescue Plan stipulates that CTC payments will start arriving in July, but a specific date hasn't been announced. On March 12, the IRS promised that more information will be coming soon.
Do I need to refile my 2020 taxes?
If you’ve already filed your 2020 taxes, you shouldn’t file an amended return just to receive CTC money. According to Rettig, “payments will be automatic for those who file their 2020 tax returns by May 17, the new tax deadline.”
Is there a special website?
The IRS is also planning to build a special web portal for CTC payments, but that will not happen until after tax filing season ends. Once it is up, recipients will be able to log into the CTC portal and update their information as circumstances change, such as adding a new baby born in 2021.
You must return extra funds
There is one important note, however: If you receive more money than you should, you cannot keep it. You must return it!
An example of this if you and your child’s co-parent (who is not your spouse) are both paid for the child tax credit for the same dependent.
When you file your 2021 tax return (in 2022), if your tax situation isn't what the IRS has in its system and you weren't entitled to as much as you received, you'll have to give the overpayment back. To avoid this tax inconvenience, make sure all your information is updated before the payments start arriving.