Millions of Americans are set to receive cash from the federal government starting on Thursday in the first round of monthly advance child tax credit payments.
It's a mouthful, but it's money: Due to a recent policy change, families can expect to get up to $300 per kid, depending on age and eligibility, every month for the next six months. July 15 is the official payment date for the initial round of checks.
The child tax credit is usually $2,000 per qualifying child, but the American Rescue Plan significantly increased the amount in connection with the pandemic earlier this year. For kids under 6, the child tax credit for 2021 is $3,600; for kids between 6 and 17, it's $3,000. (President Joe Biden is pushing to extend it further than 2021, but that's still up in the air.)
Instead of waiting to claim the credit on their taxes next spring and getting a lump sum then, families will get some of the money in monthly installments through the end of 2021. Like it did with the coronavirus stimulus checks, the IRS is coordinating the payments.
An estimated 39 million families qualify for these advance payments — but are you among them? Here's what to know about eligibility for the child tax credit payment this week.
Am I getting an advance child tax credit payment?
Most eligible families didn't have to take any action. The IRS automatically enrolled you in advance payments if you filed taxes in 2019 or 2020 and claimed the child tax credit on them. Ditto if you didn't file taxes but gave the IRS your info so it could send you a stimulus check using the Non-Filers tool on its website.
(That said, if you had/have a child in 2021, change your filing status or see your income fluctuate, you might want to contact the IRS to make sure you're receiving the right amount of money.)
You can opt out of advance child tax credit payments — and, in fact, experts recommend it if you typically owe on your taxes, share equal custody or fit into one of these other categories — but it's too late to do so for this first round. Use this IRS tool to unenroll by Aug. 2 for the Aug. 13 payment date.
2021 child tax credit payment requirements
First of all, you have to live in the U.S. for at least half of the year (or have a spouse who does).
Second, the child in question must have a Social Security number and be under age 18 as of December 31, 2021. They can be your son, daughter, foster child, step-child, sibling, step-sibling, half-sibling or descendant. They generally have to live with you for at least half of the year, have to be your dependent and can't provide more than half of their own support.
Are there income limits for the child tax credit payment?
Yes. They have to do with your modified adjusted gross income, or MAGI. In this case, your MAGI is your adjusted gross income plus any foreign earned income and/or income from Puerto Rico and American Samoa.
There are two stages of phaseouts.
If your MAGI is over $75,000 and you're a single filer, over $112,500 and you're filing as head of household, or over $150,000 and you're married filing jointly, you will see your child tax credit reduced by $50 for each $1,000 your MAGI is over the limit for your filing cohort. But in those cases, the lowest it can go is $2,000.
It'll be further reduced — below the $2,000 threshold — if your MAGI exceeds $200,000 as a single or head-of-household filer or $400,000 as a joint filer.
For more information, see Money's master guide to the 2021 child tax credit here.