Families with children could get thousands of dollars more this year and next.
Sarah Tew/CNETPayments for the child tax credit are scheduled to start in July and extend into 2022. The total amount of money eligible families can receive now has increased to $3,600 for each qualifying child under the American Rescue Plan Act. (Calculate your total payment here.) And now it looks like President Joe Biden might be considering an extension to the larger child tax credit beyond 2021.
To go along with the third stimulus check and additional weeks of unemployment benefits, families who qualify for the child tax credit could receive $3,600 for children age 5 and under or $3,000 for children under the age of 17 (kids older than 17 may qualify you for a partial payment). The total amount will be split: half coming with a families' tax return while the other half will be divided into monthly payments from July to December. This increase is only good for 2021, and it will be up to Congress to expand it to the following years.
Keep reading for all the details about the new child tax credit, including how much money you could get, whether the benefit will become permanent and how you can update the IRS on changes to your family through a portal. Plus, here's everything else the new stimulus bill brings, from new health care to insurance. Additionally, if you haven't received your third stimulus check yet, here's how to track it. This story has been updated.
How long will the expanded child credit last? Will it become permanent?
The child tax credit for 2021 is right now a temporary boost and will last only through one year. Any changes to a 2022 child tax credit would need to happen in a separate bill. Biden does want to extend the credit past 2021, but it will have to pass through Congress.
Biden spoke with lawmakers April 20 in the White House and says he plans on proposing an extension to the credit for several years according to a report by the Wall Street Journal. One member of Congress says the president wants to make the boosted child tax credit permanent, but it could have trouble passing in the Senate.
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What is the IRS child tax credit portal and when will it open?
The IRS said it will open by July 1 a child tax credit portal that will let you manage parts of your payment, such as whether you want to receive monthly payments through the end of 2021 or one sum in 2022 when you file your taxes. You will also be able to use the online portal to update the IRS on your family details, such as new qualifying children. The IRS has not offered other details about how the portal will work.
Calculate the total your family could get with the new child tax credit
The new child tax credit could potentially bring your family more money this year, assuming you're eligible. Fortunately, you don't have to do the math yourself to find out how much money you can expect. Using our child tax credit 2021 calculator, you can enter your filing status, adjusted gross income and the number of children you're claiming. Note that the calculator doesn't store any information you input.
What exactly is the child tax credit anyway?
At a basic level, the child tax credit is a credit that parents and caregivers can claim to help reduce their tax bill, depending on the number and ages of their dependents. For many, it may provide a much-needed source of relief as part of a 2020 tax year refund.
Previously, the child tax credit was a $2,000 credit parents could claim on their taxes for every child under the age of 17 (the same age range for child dependents that was used for the first and second stimulus checks). And if that credit exceeded the amount of taxes that a family actually owed, parents could still receive up to $1,400 as a refund; this is technically referred to as the additional child tax credit or refundable child tax credit. For example, a married couple with children ages 5, 10 and 12 would receive a total credit of $6,000 -- unless they were due a refund, in which case they'd receive $4,200.
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When will I start getting the child tax credit money?
The child tax credit comes in two halves. The first half comes in the form of monthly payments. These checks will be split evenly and dispersed monthly starting in July until December. The second half comes as a tax refund on your 2022 taxes.
What if I don't want 7 different payments?
If for any reason you don't want to receive half your money in 2021, you will be able to opt out of monthly child tax credit payments. Learn more in our guide.
How did Biden's plan change the child tax credit for 2021?
The American Rescue Plan will temporarily give more money to families. Here's everything that changes:
- Credits increase from $2,000 to $3,600 per child under 6 and $3,000 for children older than 6.
- The credit would also be fully refundable.
- Money from the credit will be split: Half will be paid through the tax refund in 2022 and the other half will be paid monthly from July to December.
- There is no $2,500 earnings floor.
- Families in Puerto Rico can receive the credit.
Here are more details on money for qualified dependents -- and who counts.
With the child tax credit for 2021, you could get more than one check this year.
Sarah Tew/CNETAm I eligible for the child tax credit?
Families with kids under 6 will receive up to $3,600 per child under the new COVID relief bill. Families with children aged 17 and under will receive a credit of $3,000 per child. Families with older kids are also eligible: You can claim $500 for each child aged 17 and 18, or for full-time college students between the ages of 19 and 24.
The tax credit applies to children who are considered related to you and reside with you for at least six months out of the year.
Note that though the eligibility requirements are relatively broad, higher-income families may receive a reduced credit. But married couples filing jointly with an adjusted gross income under $400,000 are eligible for the full amount, as are individuals with an AGI under $200,000.
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Under the new plan, the amount of the larger credit will start to phase out for single people earning more than $75,000 a year, heads of household earning more than $112,500 a year and married couples earning more than $150,000 a year. Here are more child tax credit eligibility details.
What if I have a newborn in 2021 after the checks start to arrive?
Bottom line: You'll qualify, as long as you meet the income requirements. Here's what to know about the child tax credit and 2021 babies.
Here's the deal with shared custody situations?
Parents who share custody will not be able to both claim the 2021 child tax credit. Here are more details about a shared custody situation and the child tax credit.
Will the expanded child tax credit be based on my 2019 or 2020 tax return?
It will likely depend. The IRS will be tasked with basing your eligibility for the child tax credit on your 2020 tax return, if that's been processed by the first July payment. Otherwise -- in the case of a tax return extension, for example -- the agency would use your 2019 taxes to determine the amount you're owed.
For more information, here's everything in the 2020 stimulus bill, when the stimulus check could arrive and how to calculate how much money you'd get in a third check. Here is also how to track your payment and what we know about using direct deposit to receive your money.
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