This article was last updated on April 21
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 can 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?
July 2021 is the date put out by the Biden administration and in the legislation, but we don’t know the specific date yet. So far, the IRS hasn’t released any official dates that we can count on. Especially as they are in the middle of a busy tax season and trying to catch-up on refund and stimulus payments. Besides the usual “as soon as possible” of course there is no firm guidance, but here’s some timeline insights (from CNET) that may help you estimate how your future payments will be structured:
|Monthly||Payment ages 5 and younger||Payment ages 6 to 17|
|July 2021: First payment of the year||$300||$250|
|December 2021: Last payment of the year||$300||$250|
|April 2022: Second half of payment||$1,800||$1,500|
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 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. 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. 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. Most likely it will be based on 2020 tax return payment information for most people who filed. Provided, the return has been processed by the first July payment. Otherwise, they’ll use your 2019 taxes instead. For non-filers they will use information from the relevant federal agency.
I was overpaid, should I return the money to the IRS?
Of course. It’s not as flexible as the stimulus check rules. You can pay it back by mailing the payment back to the IRS address.
Will this 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. 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.
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 portal will be available on July 1 (according to the IRS).
- 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