Millions of working families across the United States will receive their next payment this week from the federal government from the expanded 2021 Child Tax Credit.
Eligible families received their first installment on July 15, and will continue to see hundreds of dollars delivered by the Internal Revenue Service (IRS) each month throughout the rest of the year.
The credit — worth between $250 and $300 a month per child to eligible families — was signed into law by President Joe Biden as part of the $1.9 trillion American Rescue Plan, designed to help the United States rebound from the coronavirus (COVID-19) pandemic.
So when is the next monthly payment slated to hit your bank account? Wednesday, Sept. 15.
After that, payments will continue to come each month through December on the following dates: Oct. 15, Nov. 15, and Dec. 15.
And if you still haven’t received previous payments, and you’re eligible for the program, you can request a payment trace from the IRS to track its status. How long you’ll have to wait before filing for a payment trace depends on whether you’re expecting your payment to arrive via direct deposit or a mailed check.
The IRS will automatically send the advanced monthly payments via direct deposit into bank accounts on file with the IRS, while all other families will receive the payment in the form of a check. If you’re expecting a direct deposit, you can file for a payment trace if it’s been five days since the deposit date and the bank says it still hasn’t received the payment.
For those expecting a check mailed to a standard address, you must wait four weeks before filing for a trace, and for those without a standard address, the wait will be even longer.
Residents with a forwarding address on file with the local post office must wait six weeks before filling a payment trace, and residents with a foreign address will have to wait nine weeks.
American families will receive their expanded Child Tax Credit in two phases. Half of it will come via advanced monthly payments, which began in July and ends in December. The other half will be claimed on residents’ 2021 tax return.
Or families can choose to opt-out of the monthly payments, and receive their credit in one lump sum when they file their 2021 tax return.
It’s worth considering this option for a number of reasons.
If you earn more in 2021 than you have in past years, you could be disqualified from the Child Tax Credit. So if you receive the payments this year, and then it’s determined you weren’t eligible when you file your 2021 tax return, you’ll have to pay the money back.
Eligibility for payments could also change if your child ages out of the eligible age bracket in 2021 — even if they were eligible in 2020.
Some divorced or unmarried parents could run into issues too, if they claim their child as a dependent in alternating years. But the IRS portal should allow parents to update their tax information and specify which parent should receive the payments, so that one parent isn’t getting the credit two years in a row.
And for some, it may just be better financially to receive the credit in one lump sum, instead of monthly installments.
The IRS is issuing the monthly payments by direct deposit. So while you may not be able to opt out of previous payments or September’s payments hitting your bank account, you can opt-out of future payment dates.
You can opt-out of future payments by using the IRS’ Child Tax Credit Update Portal. Here are the deadlines for each payment date:
- Oct. 4 for the Oct. 15 payment
- Nov. 1 for the Nov. 15 payment
- Nov. 29 for the Dec. 15 payment
It’s important to understand that those who opt-out of the monthly payments, but ultimately qualify, will get the credit when they file their 2021 tax return; it will come as a refund.
ABOUT THE CHILD TAX CREDIT
Around 36 million eligible American families will receive financial relief as part of the Child Tax Credit.
The Child Tax Credit has been expanded from $2,000 per child annually up to as much as $3,600 per child.
Families will receive $3,600 for each child under the age of 6, while receiving $3,000 for each child between the ages of 6 and 17.
Parents with dependents between the ages of 18 and 24 can also claim the child tax credit. However, they will have to wait until they file their taxes to receive the money.
WHO IS ELIGIBLE?
Eligible families for the child tax credit, according to White House, include:
-- Families making up to $150,000 filing as a couple.
-- A parent filing as a head of household making up to $112,500.
-- A single parent filing alone making up to $75,000.
Here is eligibility information for dependents:
-- Those who are 17 years old or younger are eligible.
-- The child must be a U.S. citizen with a valid Social Security number.
-- The dependent must have lived with you for at least six months of the year. However, according to the IRS, temporary absences by you or the child for special circumstances -- such as school, vacation, business, medical care, military service, or detention in a juvenile facility -- count as time spent living together.
-- A child born before the end of 2021 will also qualify for up to $3,600 toward the Child Tax Credit.
The IRS has a “non-filers tool” for those who have not filed or signed up to receive the check, where an individual will be asked some basic personal information to determine eligibility.
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