Families can use an online tool to unenroll if they prefer to receive a lump sum.
The first monthly payment of the expanded Child Tax Credit from the American Rescue Plan will be made on July 15. Roughly 39 million households, which covers 88 percent of children in the United States, are expected to receive monthly payments without any further action required.
With changes to the Child Tax Credit, the Internal Revenue Service will pay half the total credit amount in advance monthly payments. You can claim the other half when filing your 2021 income tax return. Eligible families will receive up to $300 per month for each child younger than 6, and up to $250 per month for children ages 6 to 17.
The American Rescue Plan increased the maximum Child Tax Credit in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for kids between the ages of 6 and 17. The American Rescue Plan is projected to lift more than 5 million children out of poverty this year, cutting child poverty by more than half, according to a press release from the U.S. Department of the Treasury.
Information previously provided to the IRS through tax returns will be used to determine if you qualify and automatically enroll you for advance payments. For families who aren’t normally required to file an income tax return, officials have developed an online tool to help them register for the advance payments.
“Our goal is to make sure that every American can get the relief funding they need as simply as possible,” Secretary Janet Yellen said. “We know working families can’t put off paying for doctor’s visits or grocery bills, and this new tool will help more people get their tax credit every month, starting in July.”
The Non-filer Sign-up Tool is for people who did not file an income tax return for 2019 or 2020 and did not use the IRS Non-filers tool last year to register for Economic Impact Payments. The tool enables them to provide required information about themselves and their qualifying children.
Users can also enter direct deposit bank information so the IRS can deposit the payments directly into their checking or savings account. Eligible individuals who filed a 2019 or 2020 tax return or used the IRS Non-filers tool last year to register for Economic Impact Payments do not need to take any action to receive their payments.
This online tool is also designed to help eligible individuals who don’t normally file income tax returns register for the $1,400 third round of stimulus checks and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.
Additionally, the IRS has upgraded the Child Tax Credit Update Portal to enable families to update their bank account information. The tool also allows families to unenroll from the advance payments if they don’t want to receive them.
Any updates made by Aug. 2 will apply to the Aug. 13 payment and all subsequent monthly payments for the rest of 2021. Families will receive their July 15 payment by direct deposit in the bank account currently on file with the IRS.
People without current bank account information can use the online tool to update their information so they can get the payments sooner by direct deposit. Those who are not enrolled for direct deposit will receive a check.
Even after payments begin, families can stop all future monthly payments 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 Aug. 2.
More information is available on the IRS website.