Child Tax Credit 2021: Parents Will Start Automatically Receiving Monthly Payments July 15
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The first monthly payments of the newly enhanced Child Tax Credit (CTC) will be made on July 15, the U.S. Department of the Treasury and the Internal Revenue Service announced Monday.
Around 39 million households, which account for 88% of children in the U.S., are slated to begin receiving the monthly payments without any further action required, the Treasury and IRS said via a statement. The payments — which will be made on the 15th of each month, unless the 15th is a weekend or holiday — will be up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and above.
Households will receive the CTC payments through direct deposit, paper check or debit cards, though the Treasury and IRS said they are committed to maximizing the use of direct deposit so payments arrive quickly and securely. IRS Commissioner Charles Rettig has previously said that the agency will be setting up an online portal where taxpayers will be able to choose whether or not they will participate in the monthly payments. The IRS didn't include information about the portal in Monday's statement.
The Child Tax Credit, which is intended to help parents offset some of their federal tax burden, got a major boost from the American Rescue Plan passed in March. The biggest change is that half of the total 2021 expanded CTC will be paid out in these monthly payments. Plus, the legislation increased the total amount of the credit from $2,000 per child in 2020 to $3,600 per child under 6 and $3,000 per child ages 6 to 17 this year.
The legislation also got rid of the minimum earnings requirements for the 2021 tax credit and lowered the income ceiling for eligibility. Married parents who filed a joint tax return with an adjusted gross income (AGI) of $150,000 or less in 2020 and head of household filers with an AGI of $112,500 or less qualify for the maximum monthly payments this year. Parents who are single filers and earn $75,000 or less can also qualify for the whole benefit (but the majority of eligible single parents file as head of household).
Joint filers with an AGI above $150,000 and heads of household with an AGI above $112,500 won't qualify for the entire benefit, but many will be eligible for a percentage of the benefit. The CTC phases out by $50 for every $1,000 of income over the maximum amount.
Finally, the tax credit will be fully refundable for 2021, helping low-income families whose federal tax burden is lower than the total credit qualify for the full benefit.
More from Money:
Child Tax Credit 2021: Everything to Know About Eligibility, When Monthly Payments Start and More
Biden's American Families Plan Comes With a Big Tax Hike. Here's Who Could Pay More
