If you have children 17 and under and make less than $150,000 combined household income ($75,000 for individuals) keep an eye on your bank account this summer. You should begin receiving monthly advance payments of your Child Tax Credit as part of the American Rescue Plan, the U.S. Department of the Treasury announced in a press release today.
The Treasury Department said that approximately 39 million households, encompassing 88% of children in the U.S., will receive the payments automatically beginning July 15. Those who have direct deposit set up for income tax refunds will receive the payments in the account the IRS has on file on the 15th of each month through December 2021. If the 15th falls on a weekend or holiday, it will arrive the next business day. People who are not set up for direct deposit of their tax refunds will receive a check or debit card from the U.S. Treasury Department. USA Today reported that 80% of eligible families will receive direct deposit.
Families who qualify will receive up to $300 per month for each child under 6 years old and $250 per child between ages 6 and 17. The benefit phases out at $75,000 annual income for individuals, $115,000 for those who file head-of-household, and $150,000 for married couples filing jointly.
The child tax payments are an advance of the Child Tax Credit you can claim on your income taxes in 2021. Taxpayers can receive up to $3,000 per child over the age of 6, and up to $3,600 for children under the age of six, the U.S. Treasury Department press release states.
USA Today reports that the IRS will have an online portal established so that families who wish to can opt out of the advance payments and, instead, file for the tax credit on their 2021 taxes. Taxpayers will also be able to provide updated information about the number of qualifying children, income changes, or tax filing status for their household through an online portal.
Receiving the payments as an advance means you cannot claim the credit on your taxes, so you should be aware that the payments could increase your tax bill or reduce your income tax refund for the 2021 tax year. Check with your accountant to determine the best action to take and to set your expectations for next year come tax time.
More From GOBankingRates
- Follow Along With 31 Days of Living Richer
- Read About the Best Small Businesses in Your State
- What It Means To Live a Truly Rich Life and How To Achieve It
- Big Personal Goals That You Should Put Your Money Toward
Last updated: July 12, 2021