Child Tax Credits 2021
- Families will see the direct deposit payments in their accounts starting August 13, 2021. Like the first payments, the vast majority of families will receive these payments by direct deposit.
- The IRS wants to alert some recipients who received direct deposits in July that they will receive the August payments by mail. Due to an issue expected to be resolved by the September payments, a percentage of these recipients - less than 15% - who received payments by direct deposit in July will be mailed paper checks for the August payment. For those affected, no additional action is needed for the September payment to be issued by direct deposit. Families can visit the Child Tax Credit Update Portal to see if they're receiving a direct deposit or paper check this month.
- For those receiving their payments by paper check, be sure to allow extra time for delivery by mail through the end of August. Those wishing to receive future payments by direct deposit can make this change using the Child Tax Credit Update Portal, available only on IRS.gov. To access the portal or to get a new step-by-step guide for using it, click here. A change made by 11:59 pm ET on August 30 will apply starting with the September payment.
Note: ACH Will say: ‘CHILDCTC’
New monthly child tax credit payments will start July 15, 2021.
Monthly payments through the new federal enhanced child tax credit will be disbursed in monthly installments on these payment dates: July 15, August 13, September 15, October 15, November 15 and December 15.
These payments will be sent out as an advance on 2021 taxes in monthly installments that could be as much as $300 per month for younger children and $250 per month for older ones.
So far, the monthly payments are only scheduled to continue through the end of 2021. Families will receive the second half of the credit when they file their 2021 taxes in 2022. But that could change — President Biden has suggested making the enhanced credit available through 2025, and other Democrats want to make it a permanent benefit.
Who qualifies for the maximum credit?
Most American families qualify for some amount of money through the child tax credit.
The full credit is available to married couples with children filing jointly with adjusted gross income less than $150,000, or $75,000 for individuals. The enhanced tax credit will phase out for taxpayers who make more money and cease for individuals earning $95,000 and married couples earning $170,000 filing jointly.
Taxpayers who make more than that will still be eligible for the regular child tax credit, which is $2,000 per child under age 17 for families making less than $200,000 annually, or $400,000 for married couples.
What do I need to do to make sure my family gets the payment?
Most families eligible to receive the payments don't have to do anything right now, according to the IRS. The agency will use the information filed on 2020 tax returns first to determine eligibility and will notify taxpayers.
For those who haven't filed 2020 taxes, the IRS will use 2019 returns.
**The IRS has a portal available for non-filers to submit their information and receive the credit. The portal is also designed to provide the most up-to-date information about the credit and the advance payments. The agency also plans on making an additional portal for taxpayers to submit other changes going forward, such as updating family information if there's a change in custody, which parent is claiming the child and credit or if you have a child during the year. More information here.
How will payments be sent?
As with the stimulus checks sent out by the IRS earlier this year and last, most of the monthly child tax credit payments will be sent by direct deposit — some 80% of those eligible will get the money this way, according to the agency.
If the IRS has direct deposit information on your tax return, it's likely this is how you'll receive the monthly credit. If you don't have direct deposit, the IRS will also be sending out paper checks and debit cards to some families.
Can I opt out? What happens if I do?
Families can opt out of receiving the monthly payments for the credit through an IRS portal. Those who do this won't get the monthly amounts but will still receive the full credit they are eligible for when they file their 2021 taxes in 2022.
Some families may choose this route because they don't need the monthly payments immediately or prefer to get a large lump sum of money back from the IRS as a tax refund.
If you have questions about this, please feel free to call or text us at 800.779.5555. We are happy to help answer any questions you may have.