The second of six monthly payments for families with children is scheduled to hit Americans' bank accounts on Friday, providing parents up to $300 per kid for the month of August.
The payments are one of multiple changes to this year's child tax credit, thanks to legislation in the American Rescue Plan. The child tax credit is usually worth $2,000 per qualifying child, but for 2021 it's been expanded to $3,600 for kids ages 5 and under, and $3,000 for kids between 6 and 17. Unlike in previous years, half of each credit is being paid out in monthly installments from the IRS that started in July and will run through December. The rest of the credit will be applied when families file tax returns next year.
The IRS distributed the initial round of payments on July 15, first as direct deposits and later as paper checks. Now, it's preparing to send out the second. Ahead of the Aug. 13 deposit date, here are answers to some of the most common lingering questions about the advance child tax credit:
Who is eligible for the monthly child tax credit payments?
According to a congressional report, about 96% of American families with children are eligible for at least a portion of the 2021 child tax credit.
As long as your modified adjusted gross income, or MAGI, is less than $150,000 if you're married and file jointly or $112,500 if you file as head of household, you're eligible for the entire credit. Single filers with a MAGI under $75,000 are also eligible, although most single parents who qualify for the child tax credit should file as head of household.
After that, there are two stages of phaseouts for high-income families. First, your total credit is phased out by $50 for every $1,000 your MAGI is over the limit until it reaches $2,000. The next phaseout starts at a $200,000 MAGI for heads of household and $400,000 for joint filers. Above $240,000 and $440,000, respectively, families will not receive the child tax credit.
When will the August child tax credit payment be sent out?
The monthly payments are usually supposed to be deposited on the 15th of each month, but because Aug. 15 falls on a Sunday, this month's money will become available Friday.
Some parents will start to see the money in their bank accounts before Aug. 13 if they're receiving direct deposits. It's not that the IRS is playing favorites — some banks and credit unions just process the payments more quickly.
Last month, mobile banking company Chime announced that its customers were able to access the money on July 14, and some users have already reported seeing their deposit pending for August. Customers of Netspend, a prepaid debit card company for people who don't have a traditional bank account, have also said they received their deposit before July 15 last month.
If you don't see your child tax credit deposit processing in your bank account five days after Aug. 13, you can request a payment trace from the IRS.
When will paper checks for the August payment arrive in the mail?
If you did not sign up for direct deposit and are expecting a check to be sent through the mail, it's not guaranteed that the money will land in your mailbox right on time. Last month, many parents found that their mailed checks weren't scheduled to arrive until a week or even longer after the initial July 15 payment date. So if you don't see anything on Friday, don't panic just yet.
Parents can check the status of their child tax credit payments using the Child Tax Credit Update Portal (aka the CTC UP) on the IRS website. If you still haven't received your payment after four weeks for a regular address, six for a forwarding address and nine if it's being sent to a foreign address, you can request a payment trace from the IRS.
Can low-income parents still sign up for the child tax credit?
While you can technically earn zero dollars and still receive the child tax credit, if you haven't filed federal income taxes in the past two years due to your low-income status, you won't get the monthly payments until you enroll using the IRS's Non-Filer Sign-up Tool.
As Money reported earlier this month, the enrollment process can be challenging for many parents: The sign-up tool does not have a mobile format, making it hard to use for families who don't have a computer at home. It's also only available in English, although there is a 21-page guide on how to enroll available for Spanish speakers.
But if you're in need of the money, taking the extra time to enroll can provide your family with the extra funds you need without losing access to other welfare programs like SNAP benefits (food stamps) and Medicaid.
Is the advance payment program still only for 2021?
Yes, although it could be extended in the near future.
The Biden administration has proposed legislation known as the American Families Plan, which includes an extension of the child tax credit monthly payment program, and Sens. Bernie Sanders, I-Vt., and Chuck Schumer, D-N.Y., have introduced a budget resolution to make it happen.
For more information on the child tax credit, check out Money's extensive guide to all things CTC here.