The IRS Will Start New Monthly Payments To Most Families With Children. Special Portal Is Now Live.
The IRS announced that the Child Tax Credit Advance that passed as part of ARPA would start on July 15th. It is estimated that 88% of children in the U.S. are eligible.
TL;DR - How the program works;
- The payments will be made on the 15th of each month unless the 15th falls on a weekend or holiday.
- Payment will begin July 15th until December 15th.
- If the IRS has your bank information on file, you'll get the money via direct deposit. Otherwise, you'll be getting the payment via check or debit card.
- $300 per month per child under the age of 6 and $250 per month per child between ages 6 to 17.
- The credit will also include children who turn 17 in 2021.
- The IRS launched a portal where you can update your information.
More details about the program;
- The full credit is available to married couples filing jointly with adjusted gross income less than $150,000, or $112,500 for head of household.
- The Child Tax Credit Expansion is only for 2021.
- The IRS will determine eligibility and calculate the amount of the advance payment based on your 2020 tax return. If a 2020 tax return has not yet been filed, it will be based on your 2019 tax return.
- Unlike the stimulus, the IRS will get the money back if you made too much money when you file your 2021 tax return.
- The regular Child Tax Credit will still phase out after $400,000 for MFJ
- US Citizens living abroad are not eligible for the expanded Child Tax Credit.
- The full value of the credit is $3,600 for children under age 6 before the end of 2021 and $3,000 for children between the ages 6-17.
- On June 7 the IRS began sending out letters providing details about the above information.
🖥️ Special Portal:
- The IRS portal is now live!
- You can now use this portal to;
- View your eligibility
- View your advance payments
- Opt-out of getting the Advanced Child Tax Credit and claim a bigger refund at the end of the year. If you opt-out of the advance, you are still eligible to claim this credit on your 2021 tax return.
- However, at this time, you can not update your income or marital status and the number of qualifying children.
- If you are not required to file a 2020 tax return and don't plan to you can apply for the advanced child tax credit here.
Note of caution! You might be in for a surprise if you don't update your information.
While the IRS is using older income information to deliver the monthly payments, the credit owed is ultimately determined by 2021 income and will have to be reconciled on next year’s tax return. That means individuals who got a new job or received a raise in 2021 may find themselves owing money to the government if their monthly payment was too high.
You might also receive too much in monthly payments if you have a child who is no longer considered a dependent in 2021 but was accurately claimed on the 2019 or 2020 tax return.
(Although, the March law offers some repayment protection in those cases for lower-income households.)
Do you have anything to add? Do you have any follow-up questions? Please post below.
You can also read more from the IRS here.
🔊 For a podcast version of this article in Yiddish click here.