Millions of families will soon receive their third child tax credit payments, which are set to be distributed on September 15.
Most parents will automatically receive the enhanced credits of up to $300 for each child up to age 6 and $250 for each one age 6 through 17. The Internal Revenue Service is scheduled to send three more monthly payments in 2021.
The infusions may serve as even more of a lifeline to struggling families now that the pandemic unemployment benefits and eviction moratorium have ended.
In August, the agency distributed more than $15 billion to the parents of roughly 61 million children.
But low-income households may not get the payments if they did not file 2020 or 2019 tax returns nor used the IRS tool to claim their coronavirus stimulus checks. As many as 2.3 million children may be in such families, according to the Treasury Department.
They can go to GetCTC.org or an IRS portal to provide the necessary information to receive the funds.
The expanded child tax credit, which was created as part of the Democrats’ $1.9 trillion relief package in March, is in effect only for 2021. But lawmakers are looking to extend the monthly payments through 2025 as part of the party’s $3.5 trillion budget reconciliation bill.
The enhanced credit is expected to cut child poverty nearly in half for 2021, experts say.
If it is extended, 4.3 million fewer children would be in poverty in a typical year, according to a recent Urban Institute analysis. The child poverty rate would fall from 14.2% to 8.4% — a reduction of more than 40%.
There already is evidence that the payments are having an impact: A smaller share of households with children are reporting that they sometimes or often didn’t have enough to eat over the past seven days than did before the payments started going out in mid-July, according to the Census Bureau’s Household Pulse Survey.
Here are four more things you need to know about the expanded child tax credit:
Who qualifies?
The full enhanced credit is available for heads of households earning up to $112,500 a year and joint filers making up to $150,000, after which it begins to phase out.
For many families, the credit then plateaus at $2,000 per child and starts to phase out for single parents earning more than $200,000 or for married couples with incomes above $400,000.
More low-income parents are eligible for the child tax credit because the relief package made it fully refundable. It had been only partially refundable — leaving more than 26 million children unable to get the full credit because their families’ incomes were too low, according to Treasury Department estimates.
About half of Black and Latino children, as well as kids living in rural communities, received only a partial credit or no credit at all because their families’ incomes were too low prior to the enhancement, said the left-leaning Center on Budget and Policy Priorities.
The provision means that a single mother with a toddler and a second-grader who earns $12,000 a year would see her credit increase to $6,600 for 2021, up from about $1,425, according to the center.
The Democrats’ budget reconciliation package seeks to make the credit fully refundable permanently.
Parents who aren’t citizens can receive the payments for their citizen children as long as they have individual taxpayer identification numbers (ITIN) and their children have Social Security numbers.
Families can check their eligibility through this IRS website.
How much will I get?
That depends on your household income and family size.
Eligible families can receive a total of up to $3,600 for each child under 6 and up to $3,000 for each one age 6 to 17 for 2021. That’s an increase from the regular child tax credit of up to $2,000 for each child up to age 17.
When will I see the money?
Parents will receive half their credit on a monthly basis through the rest of the year. The payments will be made on the 15th of each month, unless that falls on a weekend or holiday.
They can claim the other half when they file their 2021 taxes next year.
Parents can check if they are enrolled to receive the advance payments at an IRS portal. They can also use it to provide or update their bank account information.
Those who don’t receive their monthly payments until later in the year will still get half the credit in 2021.
Families who want to receive the payments as a lump sum can opt out of the monthly installments at the IRS portal.
Some parents may not want to get the monthly payments, particularly if their incomes increase this year. The payments are credits toward families’ tax liability for 2021 but are based on 2020 or 2019 income and household size. Some who get the advance credits could wind up receiving much smaller refunds — or even owing taxes — next spring when they complete their 2021 returns.
The IRS advises parents whose incomes or circumstances change during the year to update their information through the agency’s portal when it adds the functionality. The IRS can then adjust the monthly payments accordingly.
Lawmakers, however, protected lower-income parents from potential overpayments. Heads of households making $50,000 or less and joint filers with incomes of $60,000 or less will not need to repay any excess payments.
Do I have to do anything to get it?
The vast majority of families get the credit automatically because they filed 2019 or 2020 returns claiming the credit.
The IRS also sends the payments to Americans who previously used its non-filer portal to register for the stimulus checks.
But families who haven’t filed tax returns recently or used the non-filer tool must take action. They can use another IRS portal to register to receive the enhanced child tax credit. The sign-up tool allows users to provide the necessary information about their households and, if they choose, their bank accounts so the agency can directly deposit the funds.
Parents can also go to GetCTC.org to file simplified returns and claim the enhanced credit. The site, which launched earlier this month, was developed by the non-profit Code for America, in collaboration with the White House and the Treasury Department. It is available in English and Spanish.
The IRS portal has been criticized because the tool is only in English and does not work well on cell phones.
