The Biden administration began distributing expanded child tax credit payments last month, giving parents on average $423, with payments continuing through the end of the year.
President Joe Biden increased the size of the tax credit as part of his $1.9 trillion coronavirus relief package, as well as making it fully available to families without any tax obligations. The benefit is set to expire after a year, but Biden is pushing for it to be extended through 2025 and ultimately made permanent.
The Senate Democrats' $3.5 trillion budget resolution for fiscal year 2022 that passed Wednesday includes an extension of the child tax credit for an unspecified number of years. Committees still need to sort out the actual details of the legislation.
A closer look at how the payments work, who can receive them and what to do if you haven't received a check:
The credit is $3,600 annually for children under age 6 and $3,000 for children ages 6 to 17. But half of the credit, $1,800 to $1,500, will be distributed as an advance on the 2021 taxes in six monthly payments. This means eligible families will receive $300 monthly for each child under 6 and $250 per child older than that.
This is a change from last year, when the credit totaled $2,000 per child. Families who did not owe the government income taxes were also unable to claim the credit, a restriction that Biden and Congress lifted.
The IRS will disburse the payments on these dates:
The payments begin to phase out at incomes of $75,000 for individuals, $112,500 for heads of household and $150,000 for married couples.
Higher-income families with incomes of $200,000 for individuals and $400,000 for married couples can still receive the previous $2,000 credit.
If you filed taxes and the IRS already has your bank account information, the payments should be deposited directly into your account on the 15th of each month, except in August when payments will be deposited on the 13th because the 15th falls on a Sunday.
If you haven't set up your banking details, you should expect the payments to come as paper checks, so give it several business days to arrive via mail.
If you haven't filed taxes for 2019 or 2020, or are not required to, you might still be eligible for the credit. The IRS created an online tool for parents to register their information electronically. Non-filers can register here.
And since the IRS is basing the payments on tax filings from 2019 and 2020, if you had a child in 2021, you will need to let the IRS know in order to receive your eligible payments. You can update the information at a different IRS online tool available here.
The hundreds of dollars a month from child tax credit payments could go a long way - you could use it for expenses now or even prevent credit card debt during the holiday season. Personal finance expert Catherine Alford discusses the options.
If you still haven't received your payment for the month of July, there may be a couple of reason for that.
Yes. Some people would rather wait to get a bigger tax refund when they file their 2022 taxes early next year and might not want the monthly advance payments.
About 1 million people have opted out, according to administration officials.
The short answer is no. The child tax credit payments aren't considered income, so you won't have to pay income taxes on them.
However, if you end up getting more child tax credit than you qualify for, you may need to repay the IRS some of that money back. This may happen if someone in the household gets a higher paying job later this year, increasing the adjusted gross incoming and pushing you above a previous income bracket.
