New Child Tax Credit Payments Are Coming Soon – Here’s What Families Should Know

If you’re feeling a mix of excitement and uncertainty about the new Child Tax Credit, you’re not alone. Rest assured, this initiative is indeed happening, and it’s long overdue. Starting on July 15th, many families will experience a financial boost akin to an early holiday gift, thanks to the enhanced child tax credit included in the American Rescue Plan that President Joe Biden signed earlier this year.

What Does This Mean for Your Family?

So, what does this mean for your family, and do you qualify? Here’s the scoop: Previously, families received $2,000 annually for each dependent child under 17. The new plan raises this amount to $3,000 for each dependent, plus an additional $600 for children under the age of six.

Eligibility for Financial Assistance

Who is eligible for this crucial financial assistance? According to CNBC, the full credit is available for families with an adjusted gross income of less than $75,000 for single parents and $150,000 for married couples filing jointly. The enhanced credit gradually phases out for individuals earning $95,000 and couples earning $170,000, although they can still receive the standard child tax credit, which means their payments will be reduced starting in July.

The IRS outlines the qualifications for receiving this tax credit early: If you filed a 2019 or 2020 tax return and claimed the Child Tax Credit, or provided your information in 2020 to receive the Economic Impact Payment, you may qualify. Additionally, you must have maintained a primary residence in the U.S. for over half the year and have a qualifying child under 18 with a valid Social Security number, while meeting certain income limits.

Payment Details

Eligible families won’t have to wait until their 2021 taxes are filed to reap the benefits. Advanced payments will begin arriving soon, with distributions lasting until December 2021. For children aged 6 to 17, the monthly payment will amount to $250, while families with children under six will receive $300 each month.

It’s important to note that this financial assistance is yours to keep, with no repayment required. The appeal of this tax credit lies not only in its increase but in the fact that it’s distributed in smaller, more manageable payments rather than one lump sum—something many families are in dire need of right now.

How Will You Receive These Payments?

If you filed a 2019 or 2020 tax return and are eligible, you don’t need to take any additional steps. About 80% of those qualifying will receive their payments via direct deposit. If the IRS lacks your direct deposit details, expect a paper check or debit card in the mail. Future payments will occur on the 15th of each month unless that date falls on a weekend or holiday, in which case the payment will be sent on the next business day. After filing your 2021 taxes, you will receive the remaining half of the enhanced child tax credit.

A Step Towards Universal Basic Income

This initiative marks a significant step towards universal basic income for parents—a much-needed support system. The enhanced child tax credit is poised to assist 88% of American families with children, potentially lifting over four million kids out of poverty and providing vital support to those struggling to make ends meet.

President Biden has proposed extending this child tax credit through 2025, with some lawmakers advocating for its permanence. Can I get a resounding cheer for that? As a parent of three, I can personally attest to the importance of this support, especially for families facing high daycare costs. It’s a step toward ensuring that my children, when they have families of their own, won’t have to face the same struggles.

Celebrate This Development!

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Summary

The new Child Tax Credit is set to provide increased financial support to families starting July 15, 2021. With payments of up to $300 per month for children under six and $250 for older kids, this initiative aims to benefit millions of families and alleviate financial stress. The full credit is available to families with adjusted gross incomes below certain thresholds, and payments will be distributed monthly until December 2021.