Over two months ago, the American Rescue Plan increased the child tax credit from $2,000 to $3,600 for children under the age of 6 and increased the payout from $2,000 to $3,000 for minor dependents over that age. Unlike the child tax credit in previous years, 100% of this credit is refundable for the 2021 tax year. The plan was for half of this credit to be paid out via monthly direct deposit or checks starting this summer and the remaining balance to be credited when you file your 2021 taxes. The treasury department initially said the payments would be periodic between July and December while others argued it would be difficult to start sending monthly payments so soon.
On Monday, President Biden stated that 90% of families with children will start receiving this tax relief automatically in July. Income eligibility for the full payout of the credit is the same as it was for the most recent stimulus checks. Payments go to individuals with modified adjusted gross incomes up to $75,000 and $150,000 for married couples filing jointly. The threshold is $112,500 for people filing as head of household. Your 2020 tax return will determine your eligibility, if those are not available it will be your 2019 return. Eligible parents will receive $300 monthly payments for children under 6 and $250 monthly payments for children 6-17. Payments are expected to begin July 15th.
Do you have a child that qualifies for the $3,600 credit? Send your address and their shirt size to Dylan@firstkeyfinancial.com and you will receive a free shirt!