You Might Receive Your First Child Tax Credit Payment Today — Here’s What to Anticipate

This week marks a significant moment for approximately 39 million families across the United States, encompassing around 65 million children. The U.S. government is rolling out its initial payments for the expanded child tax credits established in March. Despite the time that has elapsed since President Alex Carter signed the American Rescue Plan into law, many Americans may still be unclear about how this program works. Let’s break it down.

What is the Enhanced Child Tax Credit?

“This initiative provides much-needed support and relief to families facing hardship,” President Carter stated when he enacted the enhanced child tax credit. This credit is part of the American Rescue Plan and allows for a maximum of $3,600 per child under age 6, and $3,000 for children aged 6 to 17 in 2021. Payments will be distributed monthly for the remainder of the year, at rates of $300 per month for families with younger children and $250 per month for those with older kids. Families can claim credits for an unlimited number of children.

Who is Eligible for the Enhanced Child Tax Credits?

Most families in America will qualify for some amount of financial assistance. The maximum credit applies to married couples filing jointly with an adjusted gross income under $150,000, while single parents can qualify if their income is under $75,000. The credit phases out for higher earners — individuals making over $95,000 and couples earning beyond $170,000 will not be eligible. Eligibility is based on 2020 tax filings.

How Can Families Claim Their Child Tax Credits?

If you’ve already submitted your tax returns for 2020 or 2019, no further action is needed. The IRS will utilize your most recent tax filings to assess eligibility. Families who qualify but have not filed taxes for either year can register using the IRS non-filers’ tool. It’s advisable for families to update their direct deposit details through the IRS Child Tax Credit Update Portal, as most payments will be sent via direct deposit. If the IRS lacks direct deposit information, a check will be mailed.

When Will Child Tax Credit Payments Be Disbursed?

The first payments are being issued this week, with future payments scheduled for Aug. 13, Sept. 15, Oct. 15, Nov. 15, and Dec. 15. Monthly distributions will continue only through the end of the current year, allowing families to receive about half of their tax credit in installments. The remaining portion can be claimed as a refund when filing taxes for 2022, though this could be subject to change.

Can You Opt Out of Child Tax Credits?

In a way, yes. While you cannot opt out of the credit if you qualify, you can choose to forgo the monthly payments and instead receive the total credit as a lump sum when filing your 2022 taxes. This may be a good option for families planning for a significant purchase or anticipating a tax bill. To opt out of the monthly payments, visit the IRS Child Tax Credit Update Portal. It’s important to note that it’s too late to cancel the first payment, and the deadline to opt out of the August payment was Aug. 2.

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In summary, this week is a crucial time for many families as the first child tax credit payments are being distributed. Most families will qualify based on their income levels, and there are options available to manage how and when these credits are received. For further information on related topics, be sure to explore the provided resources.