Today Is Child Tax Credit Awareness Day — Here’s What You Need to Know to Claim Your Credit
The White House has designated June 21 as Child Tax Credit Awareness Day to ensure eligible families know about the American Rescue Plan’s expansion of the child tax credit and know how to access the benefit.
See: Child Tax Credit Payment Schedule Is Out Now – Here’s When You’ll Get Your Money
Find: Your 2021 Baby Makes You Eligible for the Child Tax Credit
The American Rescue Plan signed in March as part of the stimulus relief bill includes a historic temporary expansion of the child tax credit for 2021 that will offer $3,000 for each child age six to 17 and $3,600 per child under six to eligible families. The benefit will be disbursed in two installments. The first half, $1,500 or $1,800 per child, will be paid in monthly payments of $250 or $300 starting July 15 and continuing through December. You’ll claim the other half on next year’s tax return.
You normally must have earned income to claim the child tax credit. For this year, you’re entitled to the credit even if you were not employed and had no earned income. And whereas the usual $2,000 credit is only refundable up to $1,2000, the entire expanded credit is refundable.
What “fully refundable” means is that if your total federal income tax liability is less than the credit amount, you receive the difference back as a refund. For example, if your total tax liability is $0 and your credit is $3,600, you’ll receive $3,600 back. If your tax liability is $2,000 and your credit is $3,000, you’ll receive $1,000 back. The income threshold to receive the full credit is $75,000 for a single filer.
See: Here’s How to Get the Child Tax Credit Even if You Don’t Usually File a Tax Return
Find: New Details Are Here on the Child Tax Credit Portals – This Is Why You Need to Use Them
The IRS estimates that almost 90% of children are eligible to begin receiving monthly payments without any further action required, the National Association of Counties reported. This means if you filed your 2020 or 2019 taxes, you will not need to do anything further to begin receiving your payments starting July 15. Otherwise, you must file for the credit in order to receive it.
The IRS has set up two portals where you can input your information in order to ensure you’re covered. If you have not filed or are a non-filer in general, you can use the IRS Non-Filer Portal Tool located on the IRS website. If you’ve filed a tax return but have had a change in income or marital status or you’ve had a baby, you’ll use the Child Tax Credit Update Portal, which the IRS will make available before the monthly payments begin.
About 27 million children qualify for this direct income support, including many whose families have no earned income and thus would not be eligible for the child tax credit under the normal rules. Estimates suggest that the expansion could lift nearly 5 million children out of poverty in 2021, according to the National Association of Counties. This would represent an almost 50% reduction in the child poverty rate.
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This article originally appeared on GOBankingRates.com: Today Is Child Tax Credit Awareness Day — Here’s What You Need to Know to Claim Your Credit
