Quick Facts About the Child Tax Credit
The expanded Child Tax Credit, is part of the American Rescue Plan that was signed into law to help the nation put an end to the economic challenges of the pandemic back in March. Most working families with children get a tax relief payment up to $3,000 for each child between 6 and 17 years and up to $3,600 for every child under 6 years old.
These qualifying families will receive their first payment on July 15th by direct deposit in the bank account currently on file with the IRS. Those who are not enrolled for direct deposit will receive a check.
Who qualifies for the credit?
The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:
$75,000 or less for singles, $112,500 or less for heads of household and $150,000 or less for married couples filing a joint return and qualified widows and widowers.
How to update direct deposit information
First, families should use the Child Tax Credit Update Portal to confirm their eligibility for the payments. If eligible, the tool will also indicate whether they are enrolled to receive their payments by direct deposit.
If so, it will list the full bank routing number and the last four digits of their account number. This is the account that will receive their July 15 payment, and if they don't change the account, all future payments will go there as well.
Next, if they choose, they can change the bank account receiving the payment starting with the August 13 payment. They can do that by updating the routing number and account number and indicating whether it is a savings or checking account.
How to switch from paper check to direct deposit
If families want to switch to receiving their payments by direct deposit, they can use the tool to add their bank account information. They do that by entering their bank routing number and account number and indicating whether it is a savings or checking account.
NOTE: The IRS urges any family receiving checks to consider switching to direct deposit. With direct deposit, families can access their money more quickly and it also eliminates the chance of a lost, stolen or undelivered check.
Families can stop payments anytime
Even after payments begin, families can stop all future monthly payments if they choose. They do that by using the unenroll feature in the Child Tax Credit Update Portal. Eligible families who make this choice will still receive the rest of their Child Tax Credit as a lump sum when they file their 2021 federal income tax return next year.
To stop all payments starting in August and the rest of 2021, they must unenroll by August 2, 2021.
Why unenroll?
Instead of receiving these advance payments, some families may prefer to wait until the end of the year and receive the entire credit as a refund when they file their 2021 return. The Child Tax Credit Update Portal enables these families to quickly and easily do that.
For the most up-to-date information on the Child Tax Credit and advance payments, visit Advance Child Tax Credit Payments in 2021.
SCAM ALERT: The IRS also urges people to be on the lookout for scams related to the Child Tax Credit. People who need to update their bank account information should go directly to the IRS.gov site and not click on links received by email, text or phone.