The IRS will begin making direct deposits of the new extended child tax credit payments today, July 15, through December 15.
The payments are part of the $1.9 trillion American Rescue Plan signed into law by Pres. Joe Biden.
The maximum credit amount has increased to $3,600 per qualifying child under age 6 and $3,000 per qualifying child between ages 6 and 17.
The IRS will pay half of the total credit amount in advance monthly payments of $250 or $300 based on the child’s age beginning July 15. Parents can claim the other half on their 2021 tax returns in April 2022.
The child tax credit is a fully refundable tax credit. But some families may have to pay some of the money back.
Individual wage earners with adjusted gross income (AGI) over $75,000 annually or couples earning over $150,000 annually are not eligible.
The credit will be reduced by $50 for every additional $1,000 of income over those limits.
For example, the $3,000 credit for a child aged 6 to 17 would be phased out completely for individuals earning $95,000 and for couples earning $170,000 and filing jointly.
You don’t have to be employed to receive the child tax credit. Parents who earn less than the minimum income or no income at all can still file to receive the expanded child tax credits. To do so, visit the IRS Child Tax Credit Update website here.
The increased child tax credit ends on December 15, 2021. But Biden will push Congress to extend the payments until 2025. Some Democrats vowed to make the increased child tax credit permanent.