You May Qualify for a Child Tax Credit Monthly Payment
In just a few days on July 15th, millions of families will receive their first monthly payment as part of the enhanced child tax credit program. Although the payments are coming soon, nearly half of Americans surveyed by Ally Bank still don’t know if they qualify, and a quarter don’t know how to claim their payment.
If you’re wondering if you qualify for a child tax credit, read on to learn everything you need to know about the program and how to claim the money you’re entitled to.
Do You Qualify for a Child Tax Credit?
As part of the American Rescue Plan, President Biden increased the max child tax credit to help families during the pandemic.
The credit used to be $2,000 per child. But now eligible families can receive up to $3,600 for each child under 6 and $3,000 for each child under the age of 17.
There are no limits on the number of children who can receive the credit, so large families will get a bigger payout. You can also choose how to receive the payment.
You can get half of the credit in monthly installments from July to December and get the rest in your next tax refund. Or you can opt out of the monthly payments and receive the whole credit as a lump sum in your tax return.
But does your family qualify for the child tax credit? Married couples who earn an adjusted gross income of less than $150,000 are eligible for the full credit. Individuals who have an adjusted income less than $75,000 can also receive the maximum benefit.
In June, the IRS sent 36 million letters to families who qualify for a child tax credit to let them know how much money they’ll receive. But even if you didn’t get that notice, you may still be eligible. You can check to see if you qualify using this tool on the IRS website.
What If I Don’t Qualify?
Even if you don’t qualify for the enhanced child tax credit, you may still be able to receive the regular credit of $2,000 per child under the age of 17. Individuals who earn less than $200,000 and married couples who make less than $400,000 are eligible for this smaller benefit.
You’ll also be able to choose how you get this payment. You can get half of the credit in installments of $167 per month for six months and get the other half in your tax return. Or you can choose to get the full amount at tax refund time.
How To Get Your Payment
Most families don’t have to do anything to get their payment. The IRS will use your 2020 tax return to determine your eligibility and send your monthly payments via direct deposit, just like the stimulus checks.
If you want to change the bank account the money will go to, you can do so by going to the IRS Child Credit Update Portal. You can also sign up for direct deposit in the portal if you’re not registered already.
Families who don’t register for direct deposit will receive their credit as a paper check. Debit cards may also be available in the future.
What If I Don’t Want Monthly Payments?
The IRS is giving every family half of their child tax credit in monthly installments from July to December. So if the credit you’re entitled to is $3,600, you’ll receive $300 per month for the next six months.
If you don’t want to receive half of your credit in monthly installments, you’ll have to let the IRS know. It’s too late to opt out of the first monthly payment that’s coming on July 15th.
However, you can still stop the next five installments from being sent to you and get them at tax time instead. To opt out of the next round of monthly payments coming on August 13th, you’ll have to notify the IRS by August 2nd.
Receiving Your Payment as a Tax Non-Filer
The child tax credit used to be limited to families earning at least $2,500. However, President Biden removed that requirement. So if you don’t earn enough income to have a tax filing obligation, you may still be able to get the full credit.
If you used the non-filer tool to register for the stimulus payments, then you should be all set up to receive the tax credit. But if you’re not currently registered, you’ll need to use to IRS non-filers tool to sign up so you can get the money you’re entitled to.
The child tax credit has lots of ins and outs, so it can be confusing to navigate. But rest assured that most families don’t have to do anything to receive their credit and will start seeing the money roll in on July 15th.
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