July 15 is the day families have been waiting for. Many parents stayed up until12:00 a.m. to check their bank accounts to see if the first payment safely arrived from the expanded Child Tax Credit (CTC).
“I’ve literally been stalking my bank account,” says Chicago mom Tabitha Anderson. “Just waiting to see the blue color indicating money in.”
Anderson is one of the 36 million households that will receive a CTC as a result of COVID-19 relief efforts signed by the Biden administration. As part of the American Rescue Plan Act, qualifying families will receive monthly payments of up to $300 per child on the 15th of each month, starting today, for the next six months.
The child tax credit is not new. Eligible parents have already been receiving money from the government for each qualifying child when they receive an annual tax refund. The differences are that now the amount has increased, and there will also be the ability to receive a partial advance of the credit that would normally be claimed on next year’s tax return.
The pandemic took an intense toll on parents, and the CTC is designed to help families get caught up on bills as well as strengthen the economy.
Anderson, who got pregnant with her 9-month-old son, Liam, at the onset of COVID, said the CTC will help her family tremendously. Having been in the food service industry and furloughed from work last March, Anderson depleted her savings trying to keep her family afloat during the height of the pandemic.
“We plan on using the monthly payments to help us budget for a bigger car now that we have an extra person,” says Anderson. “I also want to put money back into our savings that we had to use up.”
What Families Need to Know about CTC
Who is eligible for the CTC?
You must have a modified adjusted gross income of less than $75,000 as a single filer or $150,000 if filing jointly with a spouse. The interactive eligibility assistant is the best way for families to see if they qualify by answering just a few brief questions.
How much will I receive?
Eligible families are guaranteed payments of $300 per child up to age 5 and $200 per child between the ages of 6 and 17. The remainder of the CTC is claimed when you file your 2021 taxes early next year. Use this child credit calculator to determine your family’s benefit.
How will I receive payment?
The IRS will send the money today via direct deposit for taxpayers who receive electronic funds. Others will receive paper checks. The IRS cautions that there may be a lag time of a few days to a few weeks to receive payments, which will be disbursed on these dates: July 15, August 13, September 15, October 15, November 15, December 15.
Do I pay taxes on CTC payments?
No. CTC payments are not considered income.
Can I opt out of payment?
Some taxpayers who have had a change in qualifying circumstances or those who want to get a bigger tax refund in 2022 have asked if they could opt out of the monthly payments. The only way to opt out of payment is to visit the Child Tax Credit Update Portal.
Will the expanded CTC continue beyond 2021?
Right now, the Biden administration is pushing for the expanded tax credit to be renewed beyond 2021, but no decision has been made.
Where can I find more information about the CTC?
Visit the CTC Portal or check with your tax professional to discuss your family’s individual circumstances.
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