The Treasury and IRS announce families of 88% of children in the U.S. will automatically receive monthly payment of refundable child tax credit. The Child Tax Credit (CTC) from the American Rescue Plan will be made on July 15. Approximately 39 million households. eligible families will begin receiving these monthly payments.
Eligible families will receive a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and above. The American Rescue Plan signed into law by President Biden has increased the maximum Child Tax Credit in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for children between ages 6 and 17. The plan is said to help lift more than five million children out of poverty this year, reducing child poverty by more than half.
Payments will be made to families via direct deposit, paper check, or debit cards. Taxpayers will not have to do anything to receive the payments as they will be received automatically. The Treasury and the IRS will set up reach out programs to make those aware of the Child Tax Credit and their eligibility.
The IRS urges people with children to file their 2020 tax returns as soon as possible to make sure they’re eligible for the appropriate amount of the CTC as well as any other tax credits they’re eligible for, including the Earned Income Tax Credit (EITC). Filing electronically with direct deposit also can speed refunds and future advance CTC payments.
“The IRS is having to build a system to compute and recompute payments as people provide new information into the portals. The system must also be able to issue and track payments, as well as reconcile the payments with the taxpayer’s credit taken on the tax returns.” The IRS fully expects to launch the portal by July 1 as required under the law. Reports Kiplinger