When to Expect Your $3,600 Child Tax Credits (And How to Get Them)

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Child holding her parents' hands.

The $1.9 trillion American Rescue Plan signed last month contains new and expanded child tax credits. And while the credits are technically tied to 2021 tax returns, which you won’t file until 2022, the IRS plans to start delivering cash this year in the form of monthly installments.

Below we’ll answer commonly asked questions about child tax credits: How much to expect for each child, which households qualify, when the funds will actually arrive, and the all-important: Do I have to do anything to receive this money?

How much is each child tax credit?

That depends on your household income for 2020 (see below) and the age of your children.

Here’s a breakdown of the maximum tax credit by child:

  • $3,600: Each child under the age of 6
  • $3,000: Each child age 6-17
  • $500: Each 18-year-old dependant
  • $500: Each dependant who is age 19-24 and a full-time college student

In addition, each child you claim must live with you for at least six months out of the year, and you and your child must be U.S. citizens with social security numbers.

Which households qualify for a child tax credit?

The numbers above represent the maximum credit for each child. These figures lessen if your adjusted gross income for 2020 tops $75,000 ($150,000 for married couples filing jointly). For every $1,000 you make above those thresholds, you lose $50 of credit.

In the case of shared custody, only one parent can receive each child tax credit.

When do child tax credits arrive?

Don’t expect it all at once, as these payments are technically an advance on the 2021 credits taxpayers would normally receive when filing in 2022. Payments are expected to be sent to families on a monthly basis beginning in July and will continue through December 2021.

The monthly payments are expected to be $250 (older children) or $300 (younger children). Multiplied by six months, that will obviously only cover about half of each child tax credit. Families will claim the remaining half of the credit when they file their 2021 income tax return.

Do I need to do anything?

Your only action item, assuming you meet the eligibility requirements above, is you must file a tax return for 2020. That’s the documentation the IRS will use to determine your eligibility.

Obviously, your situation may be drastically different this year than your 2020 taxes reflect. The IRS needs a reference point to begin distribution checks quickly, and your 2020 return is the easiest way to get the ball rolling.

What if I have more kids or my income changes this year?

The American Rescue Plan, living up to its name, has a plan for this. The bill requires the IRS to build an online portal for taxpayers to update personal information that may affect their child tax credits: marital status, income, qualifying children, etc. The portal will also issue and track payments, plus reconcile the payments with the taxpayer’s credit taken on tax returns.

The portal is expected to launch on July 1, 2021.

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Author
Ryan Rabasa

Ryan Rabasa is an associate editor at Wealth Gang. His passions are technology, writing, business, and media. He won't trust an investment strategy that doesn't incorporate both technical and fundamental analysis.

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