The first advance Child Tax Credits for tax year 2021 will be sent on July 15, the IRS and Treasury announced Monday.
“With today’s announcement, about 90% of families with children will get this new tax relief automatically, starting in July,” President Biden said in a statement. In total, about 39 million households will begin receiving monthly payments on July 15, according to the IRS. After that, monthly payments will continue on the 15th of each month through the end of the year.
Here’s what you need to know about claiming the advance Child Tax Credit:
How Much Can You Get from the New Child Tax Credit?
The American Rescue Plan increased the amount of the Child Tax Credit to a total $3,600 for qualifying children under the age of 6, and $3,000 for qualifying children ages 6 through 17 (children who turn 17 in 2021 still qualify). That’s expanded from the previous limit of up to $2,000 per eligible child under age 17.
Of that total, you’ll receive half in monthly installments between July and December, and the other half when you file your 2021 tax return next spring. That means up to $300 per month for each eligible child under age 6, and up to $250 per month for each eligible child between 6 and 17 years old.
The exact amount you qualify for is based on your Adjusted Gross Income (AGI) and phases out after certain income thresholds. You can estimate your payment using your filing status, AGI, and number of dependent children you’ll have on Dec. 31, 2021. Find more information and examples to help estimate your Child Tax Credit payments here.
The expanded Child Tax Credit is currently a temporary change — it’s applicable for 2021 only under the stimulus package passed in March. President Biden’s American Families Plan, proposed in April, would extend the expanded credit through 2025, but the future of the proposal remains uncertain.
How to Receive the Advance Child Tax Credit
If you’re eligible and you’ve already filed your tax return, you’ll begin receiving the advance credit in July “without any further action required,” the IRS says.
The agency will use your most recent federal income tax return as the basis for the payment you’ll receive. File your 2020 tax return today or file for an extension to ensure your information is accurate and up-to-date by the time payments begin.
Like stimulus payments over the past year, the IRS will issue advance credit payments by direct deposit, paper check, and debit card. To receive your credit as quickly as possible, make sure the banking information on file with the IRS is correct for direct deposit.
You’ll also have the option to decline receiving advance payments and to update your information about your income, filing status, or number of qualifying children, according to the IRS. Additional details about the expanded Child Tax Credit will be added to this IRS webpage.