If you have children under the age of 18, you may have already received two Child Tax Credit Payments, with the first payment delivered in July. These Child Tax Credit Payments are part of the American Rescue Plan, enacted in March to provide direct economic relief to Americans.
Although many working U.S. parents have begun to receive the new Child Tax Credit Payments, there is still a lot of confusion on what it is, how much you should be receiving, and why some people are opting out.
To help you out, we've answered some of the most common questions about the new Child Tax Credit Payments:
What are the Child Tax Credit Payments? The Child Tax Credit Payments are advance monthly payments of half of your total 2021 Child Tax Credit. The dates for the advanced child tax credit payments are July 15th, August 13th, September 15th, October 15th, November 15th, and December 15th.
What is the 2021 Child Tax Credit? In 2021, the child tax credit increased from $2,000 per child 16 years old or younger to $3,000 for children 17 years of age or younger and $3,600 for children 5 years old and younger. However, the extra amount in 2021 ($1,000 or $1,600) gets phased out for annual incomes exceeding $112,500 for single and head-of-household filers and $150,000 for joint filers. So, although some families may not receive the extra tax credit, they may still be eligible for the original $2,000 credit, which doesn't phase out until annual income exceeds $200,000 for single and head-of-household filers and $400,000 on joint filers.
Who is eligible for the Child Tax Credit Payments? Working U.S. parents with kids under 18 are eligible for Child Tax Credit Payments if they have filed a 2020 or 2019 tax return and their income does not exceed both the first and second phaseouts.
How much should I expect to receive? Your Child Tax Credit Payments are half of your expected 2021 Child Tax Credit (based on the annual income of your most recent 2020 or 2019 tax return, divided by six. You can calculate your expected Child Tax Credit Payments here.
What would be the benefit of opting-out of Child Tax Credit Payments? You may want to opt-out of receiving Child Tax Credit Payments if you expect your 2021 annual income to be much higher than your most recent tax return. A higher income that exceeds the phaseout limits could mean that you get overpaid in Child Tax Credit through the Child Tax Credit Payments. You can opt-out of receiving Child Tax Credit Payments through the Child Tax Credit Update Portal. If you filed a joint tax return, your spouse also needs to opt-out. If your spouse doesn't unenroll, you'll still get half of the joint payment you were supposed to receive with your spouse.
Will I receive a live check or direct deposit? You will likely receive your Child Tax Credit Payments in the same form of payment as your most recent tax refund or Stimulus Check. However, there have been some people who have reported receiving paper checks vs. direct deposit even though their Stimulus Checks and recent tax refund were paid via direct deposit. You can update your payment information at the Child Tax Credit Update Portal.