Yes… really. Some who NEVER asked for government assistance WILL receive monthly checks starting in July. To be fair, it’s money those families would have received at tax time anyways.
Long story short, there is an enhanced Child Tax Credit in 2021 that you should know about. This is a result of the American Rescue Plan Act.
Here’s what you should know:
1. Families will receive up to $3,000 PER KID between the ages 6 and 17 for the tax year 2021.
2. Children under the age of 6 will receive up to $3,600 for the tax year 2021.
Previously, law allowed for a credit of $2,000 per kid. And “kid” did not include 17-year-olds…which seems silly because 17-year-olds are expensive, from my understanding.
3. If you are married filing jointly and make less than $150,000, you are entitled to the full credit.
4. If you are single and make less than $75,000, you are entitled to the full credit.
If you earn a little more than this, there is a phaseout, so you aren’t entirely excluded. It will phase out by $50 for each $1,000 your income is above the limit.
5. If you are an eligible taxpayer, you will be automatically enrolled to receive up to 50% of your Child Tax Credit in monthly payments from July through December.
It’s based on 2020 tax returns, so if you had a baby in 2019 and haven’t filed your 2020 taxes, you will need to notify the IRS to receive the monthly payment. If you don’t, don’t worry. You will get the money when you file your 2021 taxes.
6. If you DON’T want the monthly payment, you can deny and request to get the full credit at tax time. According to the IRS, “details on how to take these steps will be announced soon.”
You can read all the details for yourself on the IRS website.
Aren’t sure what to do with the money when you receive it? I have suggestions on how to spend it HERE.
What am I going to do with it? I will fund my daughter’s 529 account. I view this as “her credit,” so I am using it for her future!