Following some confusion about when the payments would begin, IRS Commissioner Charles Rettig said yesterday (April 13) that the child-tax-credit payments promised by the Biden stimulus bill would start arriving in July.
"We fully expect to launch in July," Retting said during a hearing held by the Senate Finance Committee, according to CNN (opens in new tab). "We expect to launch with payments going out on a monthly basis."
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That's a welcome change from just last month, when Rettig told the House Ways and Means Committee (opens in new tab) that the child-tax-credit payments might be delayed, and the checks come less than monthly, due to the burden on the IRS of processing tax returns filed up until May 17 and the issuing of stimulus checks.
The American Rescue Plan Act of 2021, which created the $1,400 third stimulus checks, also increased the child tax credits for most taxpayers from $2,000 per child to $3,000 for each child aged 6 through 17, and $3,600 for each child under age 6. It also made 17-year-olds, who previously had been excluded, eligible for the credit.
In previous years, many parents and legal guardians with low incomes have not been able to recoup the full amounts of child tax credits — basically a subtraction from tax bills — because the credits would put their taxes due into negative territory. That "negative" money disappeared.
An advance from the government
For 2021, that changes. All parents and guardians whose incomes qualify them for the full amount of the third stimulus check will get up to half the child tax credits as a direct payment — technically, an advance — from the federal government.
If you made up to $75,000 as a single filer in 2020, or up to $150,000 for joint filers, then you'll get $300 for each child under age 6, and up to $250 for each child ages 6 through 17, every month from July through December.
Here's a child-tax-credit calculator (opens in new tab) to tell you how much you might get. For example, if you have two teenagers at home, you'll likely get $500 per month. If you have two kids under 6 and one between 6 and 18, it'll be $850.
To qualify for the credit, eligible children must have Social Security numbers and live with the parents or guardians claiming them as dependents for at least six months of the year.
How to get the child tax credit payment
Rettig told the Senate Finance Committee that on July 1, the IRS will launch an online portal through which parents and legal guardians can communicate with the agency about changes, disputes and other issues that might affect their child-tax-credit payments.
Parents and guardians do not need to apply to the IRS receive the payments, but they will need to file a 2020 tax return. Retting said that they will also need to authenticate their identities and verify that they qualify for the payments, but he did not have further details about those measures.
The child-tax-credit increase is temporary and applies only to tax year 2021. The amount of the child tax credits phases out for single filers with incomes of up to $95,000 and joint filers up to $170,000, according to CNBC (opens in new tab).
Single filers whose income is between $95,001 and $200,000, and joint filers whose income is between $170,001 and $400,000, will get the old child tax credit of $2,000 for each child under age 18. Above those upper limits, the child tax credit phases out by $50 for each $1,000 in income above the thresholds, following pre-2021 tax law.
Responding to a question from Sen. Sherrod Brown (D-Ohio) yesterday about whether the IRS would be ready to start sending the child payments in July, Rettig replied, "We are."
"If we end up not being on track for some unforeseen situation," Rettig added, "we will advise you and the committee."