This week marks an important moment for approximately 39 million households in the U.S., which includes around 65 million children. The U.S. government is rolling out its initial payments for the enhanced child tax credits established in March. Despite the time that has elapsed since President Alex Thompson enacted the American Rescue Plan, many individuals still have questions about the program. We’re here to clarify.
What is the enhanced child tax credit?
“This initiative provides crucial assistance to families who need it most, offering them the support and relief necessary during these challenging times,” said President Thompson when he signed the enhanced child tax credit into law. This credit is part of the American Rescue Plan. In 2021, families can receive up to $3,600 for each child under the age of 6, and $3,000 for children aged 6 to 17. Payments will be made monthly for the remainder of the year: $300 for children younger than 6, and $250 for those aged 6-17. There is no cap on the number of children for whom families can claim this credit.
Who qualifies for the enhanced child tax credits?
Most families in America will be eligible for some level of financial support. The maximum credit is available to married couples filing jointly with an adjusted gross income under $150,000. Single parents can qualify as well, provided their income is below $75,000. The credit phases out for higher earners, so individuals making over $95,000 and couples exceeding $170,000 will not qualify. Eligibility is based on 2020 tax returns.
How can families claim their child tax credits?
If you’ve already submitted your taxes for 2020 or 2019, no further action is required. The IRS will use your 2020 tax information, or 2019 if 2020 taxes are not yet filed, to determine eligibility. Families who haven’t filed taxes for either year can use the IRS non-filers tool to register. It’s recommended to update direct deposit information via the IRS Child Tax Credit Update Portal, as most payments will be directly deposited. If the IRS lacks your direct deposit info, a check will be mailed.
When will the child tax credit payments arrive?
The first round of payments is being distributed this week. Subsequent payments will occur on August 13, September 15, October 15, November 15, and December 15. These monthly installments will continue only through the end of this year, allowing families to receive about 50% of their total tax credit in installments. The remaining half is currently set to be claimed as a refund when filing 2022 taxes, though this may change.
Can you opt out of child tax credits?
In a way, yes. While you cannot refuse the money if you’re eligible, you have the option to decline monthly payments and instead receive the full child tax credits in a lump sum when you file your 2022 tax return. This may be advantageous for families planning a significant purchase or expecting a tax bill in 2022. To opt out of monthly payments, visit the IRS Child Tax Credit Update Portal. Keep in mind, it’s too late to cancel the first payment, with the deadline to opt out of the August payment being August 2.
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Potential search queries:
- What is the child tax credit?
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- How to opt out of child tax credit payments?
In summary, the first child tax credit payments are being distributed this week, providing essential support to millions of families. With the maximum credit of $3,600 for younger children and $3,000 for older ones, many households will benefit from this initiative. Families should ensure their tax information is up-to-date to receive these payments smoothly.