As part of the most recent stimulus package, parents of children age 17 and younger will receive cash payments beginning in July, essentially an advance on the Child Tax Credit.
The credit itself was expanded in the American Rescue Plan Act, the stimulus package that President Biden signed into law last month. The credit is now worth:
- $3,600 per child under age 6
- $3,000 per child between ages 6 and 17
- $500 per dependent college student between ages 18 and 24
The credit was previously worth $2,000 per child under age 17, and a taxpayer received even less if they were already due an income tax refund.
In addition to providing more money per child, the new law allows the credit to be paid partially in advance, so parents do not need to wait until they file 2021 income tax returns. Parents who qualify for the Child Tax Credit will receive half of it as cash payments between July 1 and December 31, 2021, and will receive the other half on their 2021 income tax return (which will be filed in early 2022).
Parents must file a 2020 income tax return in order to qualify for the upcoming payments. The IRS is creating a portal where taxpayers can update their information in case their circumstances change.
Individual taxpayers with an adjusted gross income (AGI) of $75,000 or less will receive the full credit amount, as will couples who file jointly and have an AGI of $150,000 or less. Parents who make more than that will receive less than the full tax credit.