CORPUS CHRISTI, Texas — We are three weeks away from the beginning of the Child Tax Credit monthly installments. It’s somewhat similar to stimulus checks from the government and you don’t have to pay this back.
The Child Tax Credit was signed into law by President Biden as part of the American Rescue Plan.
It expands the benefit from a $2,000 credit taken annually, to as much as $3,600 per child, with half that amount divided into six monthly payments beginning July 15 and running through December 31.
Previously, the CTC excluded kids who had turned 17, and the benefit was limited to $2,000 per child.
It breaks down like this:
- $3,600 total for each child under the age of six, or $300 per month.
- $3,000 for each child between the ages of 6-17, or $215 per month.
That's six payments until the end of the year. The balance of the benefit will be paid out on your 2021 tax return.
Local tax expert Bill Clark cautions families to be aware of any changes in income or dependents ages.
"If things have changed going into 2021, that's what they've got to be aware of, and that's where some people are going to get blindsided."
So who qualifies?
- Single people making less than $75,000.
- $112,500 or less for heads of household.
- $150,000 or less for married couples filing a joint return.
Families who exceed certain income thresholds will receive $50 less for every $1,000 over the threshold.
Not all Americans pay taxes. A study shows that more than 3 million kids live in households where taxes aren't paid. Some because the head of household may not have the money or doesn't earn enough income.
This Child Tax Credit is primarily designed to help those children.
The IRS has already notified eligible families based on their 2019 and 2020 federal tax returns.
Parents can opt out by notifying the IRS they'd prefer receiving the benefit in one large sum on the 2021 return, especially if they anticipate a big tax bill.
If you get the CTC benefit, but don't qualify, you must opt out of it, or you'll have to pay it back later.
"It can be a false sense of security. If we've gotten these funds, and we owe it back, there are serious consequences. The IRS doesn't look the other way when you owe them money."