Starting July 15, nearly all working families will start seeing $250-$300 per child automatically deposited in their bank accounts or sent to their mailboxes on the 15th of each month for the rest of this year.
The American Rescue Plan, which was signed into law in March, increased the Child Tax Credit payments from $2,000 per child to $3,000 per child for children over the age of six and from $2,000 to $3,600 for children under the age of six—and made the payments automatic and monthly for most.
Calling the expansion “historic” effort to eliminate childhood poverty, President Biden touted the monthly payments at a White House press briefing on Thursday. “It’s a reflection of our belief that the people of this country who need a tax cut aren’t the people at the top; they’ve got plenty of tax cuts. They’re doing just fine. But it’s the people in the middle. Folks who are struggling who are looking for—as my dad would say—looking for a little bit of breathing room. This has the potential to reduce child poverty in the same way that social security reduced poverty for the elderly.”
Prior to child tax credit expansion, the credit was only offered to families who earned enough money to owe income taxes. President Biden explained, “Because of the way the tax credit was structured, before the American Rescue Plan, more than 26 million children from the hardest-pressed working families didn’t get any full payment for the child tax credit. Half of all Black and Hispanic children in American never received the full tax credit. We’ve changed all that.”
Biden continued, “This can make it possible for a hardworking parent to say to his or her child, ‘Honey, you can get your new braces now. We can get you a tutor to help you in the math class you’re having trouble with. We can get you the sports equipment you need to sign up for your first team you’re going to play on.”
Here are some frequently asked questions about the child tax credit:
Who qualifies for the payments?
Nearly all families with kids will qualify. Couples making less than $150,000 and single parents making less than $112,500 qualify for the full benefit. Those with higher incomes may qualify for a smaller benefit or no benefit.
Do I have to do anything to get the payments?
Nearly all working families with kids will get the Child Tax Credit automatically. If you filed your 2019 or 2020 tax return, or if you signed up for stimulus payments using the IRS’s Non-filer tool last year, you’re all set.
What if I didn’t file taxes?
For those who didn’t earn enough income to be required to pay taxes, you can use the Non-Filers tool to sign up for the Child Tax Credit. If you’re late filing taxes, you can still file a return to get monthly Child Tax Credit payments in 2021.
Can we get these benefits after 2021?
The new Child Tax Credit enacted in the American Rescue Plan is only for 2021, but President Biden’s American Families Plan proposes extending the credit. The president said he’d like to see the payments become permanent.
Can I opt-out of the credit?
Yes, use the “The Child Tax Credit Update Portal,” on irs.gov to opt-out and receive the credit when you file your 2021 taxes. For reasons why it might be a good idea to opt-out, go here and here.
For more info about the Child Tax Credit, go to childtaxcredit.gov.
Information provided in part by White House.gov.