New Child Tax Credits – What You Need to Know

June 22nd, 2021 by

As you may have heard, starting July 15, 2021, most parents of kids 17 years old and under will be
getting tax credits from the United States government. The credits will be sent directly to parents based
on your 2020 tax return (or 2019 if you haven’t filed yet.)

How Much Can You Expect?

For parents getting the full benefit, those payments will be $300 per month for children under the age
of 6 and $250 per month for those between the ages of 6 and 17. The monthly payments will continue
through the end of the year 2021.

The maximum benefit will go to married couples who file taxes jointly and have children and adjusted
gross income less than $150,000, or $75,000 for individuals. If you made more than that amount you
may still qualify for some credit, but at a lower amount.

What If I Don’t Pay Taxes?

Families that don’t file taxes because they don’t have enough income but have children in their
household who are eligible can now sign up for the benefit. On June 14, the IRS started a portal to
register to receive the new credit.

If your family had a change in circumstance in the last year, that may mean you are eligible for a larger
payment, or if you need to change where the benefit should be sent, the IRS will open another portal to
give the IRS that updated information. These changes might include having a baby, or a large change in
income.

Is This Free Money?

Is this free money? Not exactly. The credit is an advance on 2021 taxes in monthly installments. One way
to look at is you’re getting part of the tax refund you’d be expecting in 2022 paid out over 6 months.
You’ll get the rest of it when you file your taxes next year.

How Will We Get The Money?

About 80% of families will get their payments through a direct deposit around the 15th of each month. If
you don’t have direct deposit, you will either receive paper checks or debit cards, according to the IRS.

When families file their 2021 tax return next year, they’ll get the second half of the enhanced credit as a
refund.

Posted in Taxes