Enhanced Child Tax Credit-What You Should Know

The American Rescue Plan Act of 2021 that was passed in March enhanced the child tax credit for American families to $3,600 per child younger than age 6 and $3,000 for children ages 6 through 17. The full credit is available for married couples with children filing jointly with adjusted gross income less than $150,000, or $75,000 for individuals. The enhanced tax credit will phase out for taxpayers over those amounts and cease for individuals earning $95,000 and married couples earning $170,000 filing jointly.

In the past these credits have been claimed by Americans when filing their tax returns, but families that qualify for the enhanced amount are expected to start receiving a monthly installment of that credit July 15th.

As with the stimulus payments sent out by the IRS in the past year most of the monthly child tax credit payments will be sent by direct deposit. If the IRS has direct deposit information from your tax return, it is likely this is how you will receive the monthly credit. If you do not have direct deposit, the IRS will also be sending out paper checks and debit cards to some families.

Families can opt out of receiving the monthly payments for the credit through an IRS portal. Those who do this will not get the monthly amounts but will still receive the full credit they are eligible for when they file their 2021 tax return in 2022.

Taxpayers who make more than the income limits referenced above will still be eligible for the regular child tax credit, which is $2,000 per child under age 17 for families making less than $200,000 annually, or $400,000 for married couples.