The American Rescue Plan, passed earlier this year by Congress to help families deal with the financial effects of the COVID-19 pandemic, included a revised child tax credit with the provision that the credit could be disbursed to families as cash payments. The Internal Revenue Service began issuing the first monthly payments under the plan on July 15. Most of the payments will be made directly to bank accounts of record for the families who received tax refunds by direct deposit.
For the tax year 2021, Congress increased the child tax credit from $2,000 per child to $3,600 for children under age 6 and $3,000 for children ages 6 through 17. Eligibility is determined by the child’s age on the last day of the year. Half of the tax credit will be paid in advance to eligible families through monthly payments. The remaining half of the credit will be claimed when parents file their 2021 tax return next year.
“The first monthly payments of the expanded and newly advanceable CTC from the American Rescue Plan will be made starting July 15,” the IRS said in a press release. “Most families will begin receiving monthly payments without any additional action. Eligible families will receive a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 to 17.”
Parents can check eligibility for the advance child tax credit payments by using the Advance Child Tax Credit Eligibility Assistant at irs.gov.
“To make sure families have easy access to their money, the IRS will issue these payments by direct deposit, as long as correct banking information has previously been provided to the IRS,” the news release continued. “Otherwise, people should watch their mail around July 15 for their mailed payment. The dates for the advance child tax credit payments are July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15.”
Families wishing to opt out of the advance payments because a credit on their tax returns may be more advantageous, there is an online portal for that purpose at irs.gov.
