Stimulus Update: Claiming the Child Tax Credit for a New Family Member
by Dana George | Published on Oct. 11, 2021
Babies born this year and newly adopted children are eligible for the Child Tax Credit.
The expanded 2021 Child Tax Credit has been a financial boon for parents, depositing money into bank accounts at a time when many need it most. And to hear some lawmakers (from both parties) tell it, the Child Tax Credit could stick around indefinitely.
Before the pandemic, parents would claim a $2,000 Child Tax Credit in one lump sum when they filed their income taxes. In essence, that meant they collected funds on behalf of their children one year in arrears. It's worked out pretty well, and there did not seem to be many complaints. Still, one of the ways the Biden administration has sought to stimulate the economy while helping everyday families is through the expended credit. Now, instead of $2,000, parents can claim $3,600 for children under the age of six and $3,000 for kids between six and 17.
The credit is divided by 12, with one-twelfth deposited into the recipient's bank account each month. That means that a parent receives $300 per month for a child under six and $250 for a child between six and 17.
Only half of the Child Tax Credit will be paid out by the time the program is slated to expire at the end of the year. If Congress does not vote to extend the program, parents will be able to file for the other half of the credit when they file their 2021 tax returns early next year.
New children count
When the program was first rolled out, it became clear that the fastest way for the Internal Revenue Service (IRS) to get checks to families was to base who would receive a check (and how much they would receive) on 2020 tax returns.
That said, children born or adopted into families this year may have slipped through the cracks. The IRS doesn't know about them, and some parents may not understand that they are responsible for informing the IRS that their child has arrived.
Other parents know but have decided to claim the tax credit on their 2021 taxes. That's not a terrible idea, particularly if a family is on solid financial footing and doesn't need the money to help cover necessities on a month-to-month basis.
If you're hoping to get in on upfront payments
If you're the parent of a new child -- no matter how they came into your family -- and could benefit from a couple of months of Child Tax Credit payments in your bank account, it will soon be possible to add your new children through the IRS's Child Tax Credit Update Portal. While we're not yet sure when the IRS will allow parents to update the number (and ages) of their children, the agency says it will soon be possible to tell them about the qualifying children you plan to claim on your 2021 tax return.
If you don't manage to get your child signed up this fall, the good news is this: In a few short months, it will be time to file your 2021 tax return. And as long as you're eligible, you'll get to collect the full tax credit at that time.
President Biden has made no secret of hoping that the monthly Child Tax Credit payments will extend through 2025. If lawmakers decide to go along with Biden's plan, you will still have access to any payments you missed and begin collecting monthly checks on behalf of your child.
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