If you’re feeling a mix of excitement and uncertainty about the Child Tax Credit, you’re not alone. The good news is that it’s indeed happening, and many families will start receiving payments soon—it’s like an early Christmas gift! Beginning on July 15th, the enhanced child tax credit will roll out as part of the American Rescue Plan signed by President Joe Biden.
What Does This Mean for Your Family?
Previously, families received $2,000 per child annually for each dependent under 17. The new plan raises this amount to $3,000 per child, and adds an extra $600 per year for every child under the age of six.
Who is Eligible?
Who is eligible for this much-needed financial boost? According to CNBC, the full credit is available to families with an adjusted gross income of less than $75,000 for single filers and $150,000 for married couples filing jointly. The enhanced credit phases out for individuals earning $95,000 and couples making $170,000, but those families will still receive the standard child tax credit, which will result in reduced monthly payments starting in July.
Qualifications for Receiving Your Tax Credit Early
The IRS outlines the following qualifications for receiving your tax credit early:
- If you filed a 2019 or 2020 tax return and claimed the Child Tax Credit, or if you provided your information in 2020 for the Economic Impact Payment.
- You must also have had a primary residence in the U.S. for more than half the year.
- You need to have a qualifying child under 18 by the end of 2021 with a valid Social Security number, all while staying within certain income limits.
Essentially, eligible families can start benefiting without waiting for their 2021 tax returns. Payments will be disbursed in monthly installments until December 2021. For children aged 6 to 17, this translates to $250 per month, while those under six will receive $300 monthly.
Important Payment Information
Remember, this is your money and does not need to be repaid. The beauty of this tax credit lies not only in the increased amount but also in the fact that families can receive it earlier in smaller payments instead of one lump sum—something that many families are in dire need of right now.
How will these payments be distributed? If you filed a 2019 or 2020 tax return and are eligible, you shouldn’t need to take any extra steps. About 80% of those eligible will receive payments via direct deposit. If the IRS doesn’t have your direct deposit info, expect a paper check or debit card in the mail. Future payments will be made on the 15th of each month unless it falls on a weekend or holiday, in which case payments will be sent on the nearest business day. After filing your 2021 taxes, you’ll receive the remaining half of your enhanced child tax credit.
A Step Toward Universal Basic Income for Parents
This initiative marks a significant step toward universal basic income for parents, which is essential. The enhanced child tax credit is projected to assist 88% of American families with children and lift over four million children out of poverty, providing crucial support for families just getting by.
President Biden has proposed extending this child tax credit until 2025, with some lawmakers advocating for a permanent solution.
As a parent of three, I wholeheartedly support making this credit a permanent fixture, even though my children will soon outgrow dependency status. It will help future generations avoid financial struggles and provide a buffer during tough times.
Celebrate This Important Change
So, let’s celebrate this important change! If you’re unsure about how much you could potentially receive, check out this calculator that can do the math for you. For those seeking more information about pregnancy and home insemination, this resource is helpful.
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In Summary
The new Child Tax Credit offers significant financial relief for families, with increased monthly payments available starting soon. Eligibility is based on income, and families can expect to receive this support without delay.