Today is a big day that is part of the latest stimulus program (American Rescue Plan) as it is the first round of child tax credits for millions of families. You likely woke up this morning with money from the IRS – if you were eligible. Here is what you need to know and if you can expect to receive this latest part of the stimulus money.
The New Child Tax Credit Money is Here
With the most recent stimulus plan, the American Rescue Plan, there was a new stimulus program called the Advance Child Tax Credit. In simple terms, the Advance Child Tax Credit is a program where the child tax credit that is normally $2,000 per child is now going up to $3,000 for children over 6 and $3,600 for children under 6. While families can opt to receive the full amount when they file their 2021 tax returns, half of those amounts will start being sent out today, July 15.
This calculator shows you how much money you should expect to receive from the Advance Child Tax Credit.
When Will the Advance Child Tax Credits Go Out?
The IRS has said the these payments will start going out on/around July 15. These payments have already hit many eligible bank accounts. They will be sent mostly as direct deposit for those who have this information on file with the IRS (either through their recent tax return or through the Non-Filer’s Form). The rest will be sent via checks to the address that you have on your tax return.
After that, they will go out each month around the same time through the end of the year. The remaining half can be claimed next year on your 2021 return as a typical child tax credit.
July 15 was the start date for the direct deposits. If the IRS has your information on file for direct deposit and you did not receive the money today, wait until the end of the week. You can also check here with the IRS tool.
If you only have mail information on file, the checks will be sent out later. You can change your information to receive by direct deposit using the tools at the same link.
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What if You Haven’t Filed a Return?
If you were not required to file a tax return and you are eligible to receive this new credit, you can fill out this form here to make sure you receive the tax credit promptly next month.
Use this tool to report your qualifying children born before 2021 if you:
- Are not required to file a 2020 tax return, didn’t file one and don’t plan to; and
- Have a main home in the United States for more than half of the year.
Also, if you did not get the full amounts of the first and second Economic Impact Payment, you may use this tool if you:
- Are not required to file a 2020 tax return, didn’t file and don’t plan to, and
- Want to claim the 2020 Recovery Rebate Credit and get your third Economic Impact Payment.
Do not use this tool if you:
- Filed or plan to file a 2020 tax return; or
- Claimed all your dependents on a 2019 tax return, including by reporting their information in 2020 using the Non-Filers: Enter Payment Info Here tool; or
- Were married at the end of 2020 unless you use the tool with your spouse and include your spouse’s information; or
- Are a resident of a U.S. territory; or
- Do not have a main home in the United States for more than half the year and, if you are married, your spouse does not have a main home in the United States for more than half the year; or
- Do not have a qualifying child who was born before 2021 and had a Social Security number issued before May 17, 2021.
What if You Do Not Want to Receive Monthly Checks?
If you would rather get the full $3,000 or $3,600 (for children under 6) applied to your tax return when filed next year, the IRS has a portal here that allows you to opt out.
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You Could End Up Owing More Money Next Year
If your income changes dramatically this year over last year, you may want to unenroll from these advanced payments. The reason is that you may no longer be eligible for them and you will need to pay all of it back on your taxes next year.
Remember that these advanced payments are based on your most recent IRS return that has been processed – 2020 if you are one of the lucky ones to have already be processed or 2019 if your return is still awaiting processing.
Check the calculator above to see if your anticipated income this year would make your eligibility change for the child tax credit payments.
Remember to consult with your account or financial professional if you have questions about it.
For more answers to your questions, check out this IRS page here.