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If you’re feeling a mix of excitement and confusion about the Child Tax Credit, you’re not alone. The good news? It’s officially happening, and many families can expect a boost starting this July. 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 aged 17 and under. The updated plan increases this amount to $3,000 for each dependent, plus an extra $600 for every child under six years old.
Who Qualifies for This Essential Financial Support?
According to CNBC, the full credit is accessible to eligible children in families with a 2020 or 2019 adjusted gross income of under $75,000 for single parents and $150,000 for married couples filing jointly. The enhanced credit starts phasing out for individuals earning $95,000 and couples making $170,000, but they may still receive the standard child tax credit, resulting in reduced monthly payments beginning in July.
Eligibility Criteria for Early Tax Credit Payments
To qualify for early tax credit payments, the IRS outlines these criteria:
- 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 over half the year.
- You must have a qualifying child under 18 by the end of 2021 with a valid Social Security number.
- You must meet specific income limits.
Payment Distribution
Eligible families won’t have to wait until their 2021 taxes are filed to start benefitting. Payments will begin rolling out on July 15 and will continue until December 2021. For children aged 6 to 17, families will receive $250 per month, while those with kids under six will see $300 monthly.
This financial assistance is not a loan; it’s your money to keep. The advantage of this tax credit is not just its increase but also the option to receive it in smaller installments instead of one lump sum, which many families greatly need right now.
If you previously filed a tax return and qualify, there’s no need for additional action. About 80% of eligible families will receive payments via direct deposit. If the IRS does not have your direct deposit info, keep an eye out for a paper check or debit card in the mail. Future payments will be issued on the 15th of each month, unless that date falls on a weekend or holiday.
Long-Term Benefits
After filing your 2021 taxes, you will receive the remaining half of the enhanced child tax credit. This marks a significant step toward universal basic income for parents, which is crucial for many families. The enhanced credit is expected to benefit 88% of American families with children, potentially lifting over four million kids out of poverty. President Biden has suggested extending this credit through 2025, with some lawmakers advocating for it to be a permanent fixture.
As a parent of three, I wholeheartedly support making this a lasting benefit. It provides essential support as my children grow, ensuring that they won’t have to struggle as much to make ends meet when they start their own families. Let’s celebrate this milestone and, if you’re still uncertain about how much you can expect to receive, check out this calculator for an estimate.
Additional Resources
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Summary
The new Child Tax Credit payments will start in July, offering increased financial support to families. Eligible parents can expect monthly payments until December 2021, with the full credit amount depending on the age of their children. This initiative is part of a broader effort to provide essential assistance to families, with potential long-term benefits being discussed.
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