As part of the American Families Plan signed by President Joe Biden, families will start to see a monthly advance child tax credit starting on July 15th. Here’s what you need to know:
Who qualifies?
Heads of household earning less than $112,500
Married Couples filing joint return and qualified widows and widowers earning less than $150,000
How much is the credit?
Children under age 6 - $300/mo.
Children ages 6-17 - $250/mo.
*Children who turn 17 in 2021 are among those who qualify
Will the advance continue or is it just this year?
The increased and monthly child tax credit from the American Rescue Plan is only good for 2021 and is not set to continue in 2022.
In President Joe Biden's American Families Plan, he is proposing extending it to 2025.
*Some members of Congress have called to make it permanent. If this does not occur, the credit will revert to $2,000 in 2022 and $1,000 in 2025.
Do I have to take the advance?
No, families that would prefer to receive their credit as a lump sum next year can opt out of payments starting in August using the online IRS portal, where they also can update bank account information.
How will I receive my payment?
Families who filed tax returns for 2019 or 2020, or who signed up to receive a stimulus check from the Internal Revenue Service, do not need to do anything to begin receiving the monthly payments.
Parents who didn’t file taxes should use an online IRS tool, called the “non-filer sign-up tool,” to get their money.
Why is the government changing the child tax credit?
Researchers say it could have a significant effect on families, estimating that those dollars could cut child poverty in half. About 39 million households will be eligible for the monthly child tax credit. According to the IRS about 88% of children in the U.S. are covered by it.