New Child Tax Credit Payments Arriving Soon—What Parents Should Know

If you’re feeling a mix of excitement and confusion about the updated Child Tax Credit, you’re not alone. The good news? It’s officially happening! It’s like Christmas is coming early this July, with enhanced child tax credits scheduled to start on the 15th. This initiative is part of the American Rescue Plan signed by President Joe Biden earlier this year.

What Does This Mean for Your Family?

Previously, families received $2,000 per dependent child aged 17 and under. The new plan increases this amount to $3,000 for each child, and adds $600 for children under the age of six.

Who Qualifies for This Much-Needed Support?

According to CNBC, the full credit is available to families with an adjusted gross income of less than $75,000 for single filers and $150,000 for married couples filing jointly. The enhanced credit gradually phases out for individuals earning $95,000 and couples earning $170,000, but they can still receive the regular child tax credit, which means lower monthly payments starting in July.

Eligibility Requirements

To qualify for early tax credit payments, you must have filed a 2019 or 2020 tax return claiming the Child Tax Credit or provided your information in 2020 to receive the Economic Impact Payment. You must have maintained a primary residence in the U.S. for more than half the year and have a qualifying child under age 18 with a valid Social Security number, all while meeting the specified income limits.

Payment Details

Eligible families won’t need to wait until they file their 2021 taxes to receive these benefits. Payments will start rolling in within weeks and will continue until December 2021. For children aged 6 to 17, the monthly credit will amount to $250, while for those under six, it will be $300.

Importantly, this money is yours, and there’s no need to pay it back. The great aspect of this tax credit is not just the increase; it’s the fact you can access it in monthly installments, which many families find essential right now.

How Will You Receive These Payments?

If you filed a return for 2019 or 2020 and qualify, you don’t need to take further action. About 80% of eligible recipients will receive 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 be disbursed on the 15th of each month, unless that date falls on a weekend or holiday, in which case payments will go out on the next business day. After filing your 2021 taxes, you will receive the remaining half of the enhanced credit.

A Step Towards Universal Basic Income

This initiative marks a significant step towards universal basic income for parents. The enhanced child credit is expected to assist 88% of American families with children and lift over four million children out of poverty, providing crucial support for those barely making ends meet. President Biden has proposed extending this child tax credit through 2025, while some lawmakers advocate for making it permanent.

As a parent of three who chose to stay home due to the prohibitive costs of daycare, I fully support making this a lasting policy. It’ll help my children in the future, ensuring they won’t have to struggle as much when they start their own families.

Celebrate This Step Forward!

If you’re uncertain about how much you can expect to receive, check out this calculator for assistance.

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For additional insights, take a look at our other blog post here.

Summary

The enhanced Child Tax Credit is set to provide critical financial support to families, with payments starting soon. Families can receive increased amounts monthly, allowing for better financial management. The initiative aims to lift many children out of poverty and has the potential for long-term implementation.