Stimulus Update: 5 Things to Know About the Child Tax Payments That Are Just 2 Weeks Away
Ready to cash in on the monthly Child Tax Credit payments? Here's what you should know about the new round of stimulus money headed your way.
The IRS began issuing the third and most recent stimulus check in March, shortly after the American Rescue Plan was signed into law by President Joe Biden. It is now early July and the IRS is still sending out stimulus and plus-up payments to bank accounts and mailboxes of those who qualify.
But, while millions of Americans are still in line to receive their $1,400 payments -- or part of their payments -- millions of others are wondering whether or not more stimulus money is headed their way. While a fourth stimulus check doesn’t look likely, other free money could be headed your way soon.
Starting in two weeks, eligible households will receive hundreds per month in payments from the Child Tax Credit -- and the monthly payments will last for several months. These payments are a little more complicated than the last three stimulus checks, though, so it's important to know the details. Here are five things you should know about this new round of direct payments.
1. What is the Child Tax Credit and much is it for?
The Child Tax Credit is typically issued as a credit for $2,000 when you file your taxes each year, but the stimulus package passed in early March expanded the payment and changed the way it is issued.
With the Child Tax Credit expansion, qualifying parents or guardians with a child under the age of 6 will receive a total of $3,600 per year. This money will be paid out in two parts: half will be paid via a $300 monthly advance, and the other half will be issued via a tax credit on your 2021 taxes.
Qualifying parents or guardians with children between the ages of 6 and 17 will receive a total of $3,000 per child. This money will be paid in two parts: the first half will be an advance on the tax credit of $250 per month for each child, and the other half will be claimed on your 2021 taxes.
It's also important to note that children who turn 17 in 2021 will also qualify -- and will receive a total of $3,000 per child broken into the monthly payments and the tax credit.
2. What are the income limits on the Child Tax Credit?
This round of direct payments is determined by adjustable gross income. The maximum AGI to qualify for the Child Tax Credit is:
- $75,000 or less for single filers
- $112,500 or less for heads of household
- $150,000 or less for married couples filing a joint return
- $150,000 for qualified widows and widowers
3. When do the monthly Child Tax Credit payments start?
The monthly portion of the Child Tax Credit payments is set to begin on Thursday, July 15 and will continue through the following dates:
- Friday, Aug. 13
- Wednesday, Sept. 15
- Friday, Oct. 15
- Monday, Nov. 15
- Wednesday, Dec. 15
The other half of the Child Tax Credit will be claimed on your 2021 tax return, which is due by April 15, 2022.
4. Do I have to take the monthly Child Tax Credit payment?
You may be wondering whether you have to receive the monthly Child Tax Credit payment each month -- and there are plenty of reasons to opt out.
The good news is that you don't have to receive the monthly payments if you qualify for the expanded credit. You can opt out and receive the credit in one lump payment instead.
The bad news is that it's too late to opt out of the July 2021 payment for the Child Tax Credit if you haven't already done so. The payments are slated to start in two weeks, so you've missed the deadline.
You can, however, opt out of the payments from August through December. To do this, all you have to do is log into the IRS Child Tax Credit Update Portal, which allows you to check and see if you're enrolled to get the payments.
You can also use this portal to unenroll from the monthly payments, and it can be used to update or provide your bank information if you'd prefer a direct deposit over a paper check each month.
"To access the Child Tax Credit Update Portal, a person must first verify their identity," a recent IRS announcement states. "If a person has an existing IRS username or an ID.me account with a verified identity, they can use those accounts to easily sign in. People without an existing account will be asked to verify their identity with a form of photo identification using ID.me, a trusted third party for the IRS."
If you want to opt out of the upcoming payments you'll need to act quickly, though. You only have until Aug. 2 to change your status and opt out of the remaining monthly payments for the rest of 2021.
5. Do I have to file taxes to get the monthly Child Tax Credit payments?
If you are typically a non-filer who would otherwise qualify for this round of direct payments, don't panic. You won't have to scramble to file a 2020 tax return in order to receive your monthly payments.
The IRS is automatically making payments to those who filed their 2020 or 2019 tax returns and claimed dependents, but it has an alternative for non-filers. You can use the new Non-filer Sign-up tool to submit an electronic form and let the IRS know how many kids you have -- and what their ages are.
And, if you filed taxes but have a new addition to the home, you can also use this form to claim the babies who were born in 2020 and 2021. This will ensure you get the correct amount each month for your Child Tax Credit payment.
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