HOUSTON – The federal government is now sending money to parents with children as part of the expanded child tax credit.
The child tax credit is not new. Parents can claim a $2,000 credit per child when they file their taxes. What is new this year is that the credit is much higher for certain families and you don’t have to wait until you file your 2021 taxes to get it.
What you need to know:
- The first payments to parents started going out on July 15. They will continue every month through December 2021.
- You will receive the second half of what you are owed in April 2022 when you file your taxes.
How much you receive depends on the ages of your children and how much you make - your adjusted gross income.
- Parents of children ages 5 and under can get $3600 per child.
- Parents with children ages 6 to 17 can qualify to receive up to 3,000 per child.
- For each 18-year-old and full-time college student between the ages of 19 and 24, parents can get up to $500.
- You only get the full amount if you are: A) single and making $75,000 a year or less, B) the head of household making $112,500 or C) married filing jointly making $150,000 or less.
- The full monthly payment will be $300 per child 5 and under or $250 per child 6 to 17 years old.
You need to file your 2020 taxes to get the credit if you’re a nonfiler. The IRS will automatically make the payments for those who have their taxes filed by the May 17 tax deadline.
People who make more money, up to $440,000 for a married couple filing jointly, will also get the payments, but they will be the same $2000 per child as in years past. Keep in mind that if you receive this money now, you won’t see the benefit of a lower tax bill or a bigger refund at tax time when you file in 2022.
In June, the IRS launched two new online tools designed to help parents manage their monthly child tax credit payments. The Advance Child Tax Credit Eligibility Assistant allows you to determine your eligibility for advance payments of the child tax credit, while the Accessibility Guide for Child Tax Credit Update Portal allows you to verify your eligibility and offers the option to receive the payment in a lump sum or monthly installments.
Why you might want to opt-out of child tax credit:
If you don’t need the money, there are several reasons why you may want to opt-out of receiving the early payments.
- If you are making more money this year in 2021 than you did on your last tax return, you may have to pay some of the child tax credit money back at tax time next year.
- If you had a 17-year-old child on your last tax return who turns 18 this year, they may not be eligible for the tax credit. That will be reflected on next year’s taxes, and whatever payments you already received may have to be returned to the IRS.
It is too late to opt out of getting the first child care tax payment. But if you unenroll or opt-out by Aug. 2, you won’t receive those payments the rest of the year. You will get the remaining credit at tax time next year.
Deadlines to unenroll in the advanced child tax credit payments
- Aug. 2021 - Unenrollment Deadline August 2, 2021 - Payment Date August 13, 2021
- Sept. 2021 - Unenrollment Deadline August 30, 2021 - Payment Date September 15, 2021
- Oct. 2021 - Unenrollment Deadline October 4, 2021 - Payment Date October 15, 2021
- Nov. 2021 - Unenrollment Deadline November 1, 2021 - Payment Date November 15, 2021
- Dec. 2021 - Unenrollment Deadline November 29, 2021 - Payment Date December 15, 2021
Opting out would mean that instead of receiving $300 per month for your 3-year-old and the remainder of your money in 2022 for example, you can wait until you file your taxes next year to claim the full $3,600.