Child Tax Credit Payments: How Much & When?
If your family qualifies for child tax credits, monthly payments begin in July.
The monthly child tax credit payment is a key feature of the American Rescue Plan. Instead of waiting to claim the credit when filing 2021 taxes, families receive some of the funds up-front.
Half of the money is distributed as monthly payments – via direct deposit, paper checks, or debit cards – July through December. The rest is an income tax credit.
For each child under 6, the child tax credit jumps from $2,000 in prior years to $3,600 for 2021. Half of it is distributed in $300 payments for six months. The other half will be applied as a credit toward 2021 taxes.
For each child ages 6-17, the child tax credit is $3,000. Half of it is distributed in $250 payments for six months. The other half will be applied as a credit toward 2021 taxes.
How Much Will You Get?
Eligibility is based on your adjusted gross income in the Internal Revenue Service (IRS) system. The IRS will use figures from your 2020 tax return.
Single taxpayers receive the full payment if their adjusted gross income is $75,000 or less (phases out up to $240,000).
Married-filing-jointly taxpayers receive the full payment if their adjusted gross income is $150,000 or less (phases out up to $440,000).
Head-of-household taxpayers receive the full payment if their adjusted gross income is $112,500 or less (phases out up to $240,000).
Estimate your payment. Use this child credit calculator to estimate your payment (source: Washington Post).
When will payments go out? Payments are expected to begin in mid-July.
8 Things to Do with Extra Cash
Receiving $3,000 to $3,600 per child can be a game-changer for your budget.
Get extra mileage out of your money by planning how you will use it. A plan can help you avoid wondering where it all went a year from now.
Here are some ideas to get you started.
First, Take Care of Essentials
Food, shelter, car maintenance
Address family health needs
Catch up on bills that fell behind
See how to save time and pay your bills on time, every time.
Invest in Your Family’s Future
Save toward your child’s education with a 529 Plan for:
Private secondary school
College (undergraduate, graduate)
Open an iSave certificate for your child at favorable rates, and keep adding money
Dip your toe into purpose-built investing
Energize with Goals
Jumpstart savings for a specific purpose
Pay down debt, improve your credit score
Invest in home improvements
Build savings to cover the unexpected
Do you have a few short-term goals you’d like to put money towards? Think: Vacation, New Couch, Birthday Gift, etc.
See how to create a separate savings sub-account in online banking and name them for your goal.
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