Under the American Rescue Plan Act (ARPA) funding has been provided to expand the current Child Tax Credit (CTC) to $3,000 annually per child (or $250 monthly) between the ages of 6 and 17, while increasing it to $3,600 for children under the age of 6 (infants), equivalent to $300 monthly. The IRS will allow families to receive these payments on a monthly basis versus eligible recipients only being able to claim the credit in one lump sum via their tax return on an annual basis. Here’s some of the information included in this article, including common FAQs.
- How Much Will I get?
- Payment Schedule
- How will the IRS send the money?
- Alternatives for a lump sum payment
- What to do if the IRS overpays you?
How much money I will get?
Here is how much families can expect to get in total. These will be paid monthly OR you can opt out and claim them in your 2021 tax return filed in 2022.
|Ages 5 and younger||Up to $3,600, with half as $300 monthly payments|
|Ages 6 to 17||Up to $3,000, with half as $250 monthly payments|
|Age 18||$500 one-time check|
|Ages 19 and 24, full-time college students||$500 one-time check|
I heard July 2021, but do we have specific dates?
Yes. The IRS has started making these payments starting with the first July payment. Future monthly payments will then be made in subsequent months on the 15th, or the next following business day if that falls on a weekend. The table below shows the likely payment dates in 2021. Note that it could take a few days after the IRS payment date for the CTC money to hit your bank account or debit card.
|Monthly Payment Date||Payment to ages 5 and younger||Payment for ages 6 to 17|
|July 15th, 2021 (PAID)||$300||$250|
|August 13th, 2021||$300||$250|
|September 15th, 2021||$300||$250|
|October 15th, 2021||$300||$250|
|November 15th, 2021||$300||$250|
|December 15th, 2021|
(last payment in 2021)
|April 2022: Second half of payment|
paid via Tax return filing
How Will They Send My Money? Mail? Direct Deposit? or Check?
It depends, but most likely it will be the same way you received your last dependent stimulus checks. This is likely the latest payment the IRS information has on hand (based on your 2019 or 2020 tax filing), so will be the way you get paid. If you want the IRS to have your updated information it is important you e-file your 2020 tax return so the IRS has your latest income and dependent information to pay out this credit correctly. This is how each payment type would work.
- Direct Deposit: You’ll likely receive your CTC that way if all your previous stimulus checks are paid via direct deposit. This is the fastest (and recommended) way to get paid.
- Direct Express card: If you’re a recipient of benefits like SSI or SSDI, the payment will likely happen via Direct Express.
- Paper checks
- Debit cards (like stimulus/EIP payments) may also be a method of payments for those who don’t get it via the above means.
Can I just get the whole sum in July, instead of several small payments?
Unfortunately, not this year (2021). Especially if you’re intending to cash the whole CTC money in July. But, you can do that next year if you prefer to via your tax return. Just use the IRS online portal (when made available) to opt-out of getting monthly payments. This will then mean you don’t receive any money until Spring 2022 when filing your 2021 tax return. But the advantage is that you’d get a larger tax refund, or owe less money to the IRS because this payment is considered a refundable credit.
Which tax return will it be based on? 2019 or 2020?
Whichever one you filed the latest. The IRS is recommending you file your 2020 tax return to ensure they have your latest income, payment and dependent information. Just do this well before the first July 2021 payment to account for IRS processing delays. Otherwise, they’ll use your 2019 taxes instead. For non-filers the IRS will use information from the relevant federal agency, similar to earlier dependent checks.
I was overpaid, should I return the money to the IRS?
If you don’t qualify and got the CTC payment, you can unenroll from future payments or reconcile in your 2021 tax return filing in 2022.
Will this expanded credit be permanent?
No, it will only last for 2021, 2022 CTC changes would probably take place in another bill.
What if I share custody?
If you share custody, only one of you can claim a child as a dependent. So It’s either you or your ex-spouse. I expect this to be an area of contention like the dependent stimulus checks. So just make sure you file early and have your latest tax return with the IRS. Also expect delays if the IRS sees two claims for the same dependent (based on SSN).
I don’t usually file tax return, do I need to file 2020 tax return?
Yes, you still need to file. Otherwise IRS won’t know how many dependents in the household are eligible. And the best way to pay you. So it is important you e-file your 2020 tax return asap.
My child and I are not living together, can I still get the credit?
It depends. Under normal circumstances, you have to live together for at least 6 months out of a year. But temporary absent like illness, vacation, business, education, and military service still counted as ‘living together’.
My child isn’t US a citizen, can they qualify?
Unfortunately, no. The child must have Social Security Number.
Other Important Points about CTC:
- The CTC portal is now available and you can update a lot of information like income, dependents and bank details to ensure you get the correct monthly credit payments.
- Families in Puerto Rico can also receive the CTC payment/credit
I’ll post updates as the IRS releases them and you can follow us via the options below