The August child tax credit payment is in the mail – or headed directly to your bank account.
The Internal Revenue Service has sent more than $15 billion to the parents of roughly 61 million children, the agency said Friday.
The second monthly installment of the beefed-up credit – up to $300 for each child up to age 6 and $250 for each one age 6 through 17 – benefits an additional 1.6 million kids as the agency locates more eligible families.
Most parents receive the funds automatically. But the agency is also trying to reach low-income households who likely will not get the payments because they either did not file 2020 or 2019 tax returns or have not used the IRS tool to claim their coronavirus stimulus checks.
The agency already has a portal for these low-income families to register to receive the child tax credit payments, but it has been criticized because the tool is only in English and does not work well on cell phones.
So in coming weeks, a new mobile-friendly sign-up tool in English and Spanish will become available, the Treasury Department and the White House announced Friday. The portal, GetCTC, is being created by Code for America, a nonprofit group that also built GetYourRefund.org to help people access the earned income tax credit and other tax benefits.
Also, fewer than 15% of recipients who received payments by direct deposit in July will be mailed paper checks for the August installment due to a technical issue the IRS expects to resolve by the September distribution.
Parents reported less trouble affording food and household expenses after the first payment was sent on July 15, according to the latest Census Bureau Household Pulse Survey, released Wednesday.
Just over 10% of households with children sometimes or often didn’t have enough to eat over the past seven days, according to the survey, which was conducted July 21 to August 2.
That’s the lowest estimate since the start of the coronavirus pandemic and a “huge drop” of 3.5 percentage points from the prior survey, taken a month earlier, said Diane Whitmore Schanzenbach, director of the Institute for Policy Research at Northwestern University.
More on child tax credit:
In addition, some 29% of adults in households with children had difficulty paying expenses in the previous week, the latest survey found, down from 31.5% a month earlier.
But among households without children, the share of adults struggling to pay expenses increased slightly during this period.
The enhanced credit, which was created by the Democrats’ $1.9 trillion coronavirus relief package in March, is expected to cut child poverty nearly in half for 2021, experts say.
Here are more four things you need to know about the expanded child tax credit:
The full enhanced credit is available for heads of households earning up to $112,500 and joint filers making up to $150,000 a year, after which it begins to phase out.
For many families, the credit then plateaus at $2,000 per child and starts to phase out for single parents earning more than $200,000 or for married couples with incomes above $400,000.
More low-income parents are eligible for the child tax credit because the relief package made it fully refundable. It had been only partially refundable – leaving more than 26 million children unable to get the full credit because their families’ incomes were too low, according to Treasury Department estimates.
Parents who aren’t citizens can receive the payments for their citizen children as long as they have individual taxpayer identification numbers (ITIN) and their children have Social Security numbers.
Families can check their eligibility through this IRS website.
The expanded credit, however, is only in place for 2021, though Democrats hope to extend it as part of their $3.5 trillion budget reconciliation package.
That depends on your household income and family size.
Eligible families can receive a total of up to $3,600 for each child under 6 and up to $3,000 for each one age 6 to 17 for 2021. That’s an increase from the regular child tax credit of up to $2,000 for each child up to age 17.
Parents will receive half their credit on a monthly basis through the rest of the year. The payments will be made on the 15th of each month, unless it falls on a weekend or holiday.
They can claim the other half when they file their 2021 taxes next year.
Those who don’t receive their monthly payments until later in the year will still get half the credit in 2021.
Families who want to receive the payment as a lump sum can opt out of the monthly installments at the IRS portal.
Some parents may not want to get the monthly payments, particularly if their incomes increase this year. The payments are credits toward families’ tax liability for 2021 but are based on 2020 or 2019 income and household size. Some who get the advance credits could wind up receiving much smaller refunds – or even owing taxes – next spring when they complete their 2021 returns.
The IRS advises parents whose incomes or circumstances change during the year to update their information through the agency’s portal when it adds the functionality. The IRS can then adjust the monthly payments accordingly.
Lawmakers, however, protected lower-income parents from potential overpayments. Heads of households making $50,000 or less and joint filers with incomes of $60,000 or less will not need to repay any excess payments.
The vast majority of families will get the credit automatically because they have filed 2019 or 2020 returns claiming the credit.
The IRS will also send the payments to Americans who previously used its non-filer portal to register for the stimulus checks.
But families who haven’t filed tax returns recently or used the non-filer tool must take action. They can use another IRS portal to register to receive the enhanced child tax credit. The sign-up tool allows users to provide the necessary information about their households and, if they choose, their bank accounts so the agency can directly deposit the funds.