Money Smarts Blog
Have kids? Extra cash could be coming your way soon.
Jul 14, 2021 || IHMVCU
Starting July 15, eligible parents with children will receive monthly deposits from the Internal Revenue Service (IRS).
The American Rescue Plan—the economic stimulus bill passed to help Americans recover from the pandemic—includes legislation that significantly increases the existing Child Tax Credit (CTC) for 2021.
In the past, the credit has been $2,000 per child, but the new law is increasing that number by more than 50% -- up to $3,600 per child.
How do I know if I’m eligible?
According to the IRS, to qualify for advance Child Tax Credit payments, you — and your spouse, if you filed a joint return — must have:
- Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return; OR
- Given the IRS your information in 2020 to receive the Economic Impact Payment using the Non-Filers: Enter Payment Info Here tool; AND
- A main home in the United States for more than half the year (the 50 states and the District of Columbia) or file a joint return with a spouse who has a main home in the United States for more than half the year; AND
- A child claimed as a dependent on your 2021 tax return who is under age 18 at the end of 2021 and who has a valid Social Security number; AND
- Made less than certain income limits.
A big change in eligibility for the 2021 CTC is that low-income households will qualify for full benefits, even if one or both parents aren’t currently employed. Some higher-income households may also qualify for more based on their adjusted gross income limits.
Use this tool from the IRS if you are unsure of your eligibility.
How much will I get if I’m eligible?
First, the IRS will distribute half of the total credit as an advance on 2021 taxes in six monthly installments starting July through December 2021. The remainder will come when parents file their 2021 tax returns next April 2022.
For every eligible child you have ages 0 - 5:
- $3,600/2 = $1,800 (total you’ll receive this year in monthly payments)
- $1,800/6 = $300 (total you’ll receive each month from July to December 2021)
For every eligible child you have ages 6 - 17:
- $3,000/2 = $1,500 (total you’ll receive this year in monthly payments)
- $1,500/6 = $250 (total you’ll receive each month from July to December 2021)
If I’m eligible, is there anything I need to do to receive my payments?
Most households won’t need to do anything. Similar to the stimulus payments, the CTC payments will be a direct deposit into taxpayer accounts of their financial institution or the payment will be sent in the form of a check or prepaid debit card.
Non-filers can sign up using this tool from the IRS: Child Tax Credit Non-filer Sign-up Tool
To see if you're enrolled, unenroll in advance payments or update your credit union account or bank account information: Child Tax Credit Update Portal