Thousands of Americans are still seeking clarity around the child tax credit. We’ve put together the important information about this credit below to help you know what it is, and when and how you can receive it.

What is the child tax credit?

The child tax credit is a government assistance credit for families with children. It is part of the American Rescue Plan Act, which was signed into law by President Joe Biden in March of 2021. As a response to the COVID-19 pandemic, this plan included efforts to stimulate the American economy.

The child tax credit was created to help lift children and families out of poverty. The child tax credit for 2021 is now up to $3,600 for children 6 and younger, and $3,000 for children between 6 and 17 years old.

Instead of receiving the child tax credit on your 2021 tax return, legislation has approved tax credit payments for 2021. These payments run from July through December. The credit amount is up to $300 per month per child. Families are allowed to opt-out of the payments if they would rather use the child tax credit to reduce their 2021 taxes when filing.

While an exact number has not been released, the Internal Revenue Service (IRS) estimates that over 36 million families could meet the requirements for this credit. Read below to see if you qualify.

How can you receive the child tax credit?

Generally, families will qualify for the child tax credit if their modified adjusted gross income is up to $75,000 for a single return or $150,000 for a joint return. There is no minimum income requirement. The IRS is basing eligibility off the filer’s most recent return, either from 2020 or 2019.

You must have claimed your child as a dependent on your return, and your child must be legally related to you. The child must be a U.S. citizen under the age of 18 with their own Social Security number. The filer should be responsible for at least half of the child’s financial support and live with them for at least 6 months of the year.

If you meet all the requirements, the IRS will process and distribute your payments without any further action on your part.

When will the child tax credit be distributed?

The IRS plans to use financial information from 2020 or 2019 tax returns to distribute the child tax credit payments to eligible families. This will be done through paper checks or direct deposits. The payments are scheduled to start on July 15th and continue through 2021. The released payment schedule is as follows:

Payment 1       July 15

Payment 2       Aug 13

Payment 3       Sep 15

Payment 4       Oct 15

Payment 5       Nov 15

Payment 6       Dec 15

Customized Tax Preparation Help

We’d love to sit down and talk about your tax situation and how you can protect as much of your income as possible – legally, ethically, and responsibly.

If you’d like personalized help for navigating the often-confusing tax situation post-coronavirus, please don’t hesitate to contact Robert Hall & Associates at your earliest convenience via the webform here, by phone at 818-452-2641 or reach me directly via email at [email protected].

References

https://www.cnet.com/personal-finance/taxes/tax-refund-delayed-where-your-money-is-and-how-you-can-track-it/

https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021