Parenting is hard under the best conditions. Expectations, education, and emotions play their various roles in raising a child. And budgeting enough money for basics can be more than frustrating. In March 2021, the increase of the Child Tax Credit in the American Rescue Plan served as the biggest Child Tax Credit in history. On July 15, 2021, the first of the monthly relief payments were direct deposited or mailed to millions of U.S. American families. Let’s breakdown what this could mean for you.
What is the Child Tax Credit?
Simply, it’s a tax benefit which monetarily helps families who are raising kids. On March 11, 2021, the American Rescue Plan increased the tax credit so more families could receive larger benefits. September’s lot of Child Tax Credit payments totaled almost $15 billion, sent to nearly 35 million families.
Remember, these monthly credits are ADVANCE PAYMENTS of your Child Tax Credit. You’ll receive the remainder of the payments after your taxes are filed next year (2022). Because of the advance payments, your tax refund may be less than you’re expecting.
Highlights of the change are:
- $3,600 for each child under 6 years old
- $3,000 for each child aged 6 to 16
- 17 year olds are now eligible for the $3,000 credit
- Each family in need will receive the full tax credit amount
- Credits dispersed in monthly payments – up to $300 per kid under 6 years old and $250 per kid 6 to 17 years old
- In July 2021, the IRS started sending monthly payments (up to half of the beneficiary’s full amount)
Qualifications for the credit
If you’re eligible for these monthly tax credits, they’re automatically sent to you by direct deposit or the mail. But, you may be wondering what does one need to even be eligible?
Here’s a list of the qualifications you (and your spouse, if you filed jointly) need:
- Claimed the Child Tax Credit on your 2019 or 2020 filed tax return
- OR submitted your info in 2020 to get the Economic Impact with the Non-Filers: Enter Payment Info Here tool
- OR submitted your info in 2021 with the Non-Filer: Submit Your Information tool
- AND lived in your main house in the U.S. for more than six months
- OR filed your return jointly with a spouse who has a main home in the U.S. for more than six months
- AND have an eligible child under 18 years of age at the end of 2021 who has a valid Social Security number
- AND earned less than a particular income amount
- Bonus! The Child Tax Credit does not change your other benefits
The changes to the Child Tax Credit within the American Rescue Plan may have some parents breathing a slight sigh of relief, or at least give them a hand-up. As difficult as the day-in and day-out routine of parenting is, this historic tax credit increase is sure to help families in need.
IRS Staff. (2021, September 16). IRS: Families now receiving September Child Tax Credit payments. Retrieved from: https://www.irs.gov/newsroom/irs-families-now-receiving-september-child-tax-credit-payments ↩︎
IRS Staff. (2021, October 7). Advance Child Tax Credit Payments in 2021. Retrieved from: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021 ↩︎