Lawmakers have temporarily expanded the Child Tax Credit (CTC) available to families with children in 2021. This policy is anticipated reduce child poverty by nearly half—and to have even greater benefits for Black children, Latinx children and Indigenous children who were disproportionately likely to be denied the full value of the federal credit under prior law because they earned too little. This will make a huge difference in helping parents with the costs of caregiving and in promoting positive childhood development. Despite the wide-reaching benefits this program will have for children and families, parents are still uncertain about how the program will work.
Here are ten things you should know about the new expanded CTC program:
1. The American Rescue Plan increases the CTC available to families. The new expanded CTC will be $3,600 per year per child ages 0-5 and $3,000 per year for children ages 6-17. These funds can help parents afford necessities like diapers, school supplies, and food. But this increase in the CTC payments has only been approved for 2021.
2. Families will get the payments monthly starting in July. Parents who are eligible for the CTC will get the payments in monthly installments beginning in mid-July and continuing through December 2021. When families file their taxes in 2022, they will get their remaining CTC benefit they didn’t get through the monthly installments.
3. Families will get their CTC payments either by direct deposit or mail. The Internal Revenue Service (IRS) will use the banking information it already has on file for families to distribute the CTC payments. An estimated 80 percent of families should automatically get their CTC payment by direct deposit. The remaining families will get it by mail using the address the IRS has on file.
4. Most children will be eligible for the CTC. An estimated 90 percent of children in the United States will automatically get the CTC. Even if a parent is making little to no income, they can still be eligible for the new CTC. For married couples make $150,000 per year or less, they are eligible to receive the full CTC benefit. The benefit will phase out as their income increases above that threshold. For heads of households, the income threshold to receive the maximum CTC benefit is $112,500. Typically, children must live with the adult in the United States for more than half of the year to be eligible for the CTC.
5. Mixed-immigration-status families can be eligible for the CTC. If a child has a Social Security number and their parent(s) have an Individual Taxpayer Identification Number (ITIN), they can get the CTC if they meet the other income and eligibility requirements. (You can learn more about mixed-immigration-status CTC eligibility here.) We urge lawmakers to make kids without Social Security numbers eligible for the CTC, as they were prior to the passage of the Tax Cuts and Jobs Act of 2017.
6. About 39 million families will get the CTC automatically. If you filed a tax return in 2020 or 2019 or used the Economic Impact Payment (EIP) (commonly referred to as “stimulus payments”) non-filer portal last year, you will begin getting the CTC monthly automatically in July. Most families will not have to take any additional action to get their CTC payments. The IRS will use the information it already has on file to distribute the CTC payments to these families.
7. Other families who don’t plan to file taxes can use the IRS non-filer portal. Couples making under $24,800 annually and heads of households making under $18,650 can use the new IRS non-filer portal to claim the CTC. Families will need the full names and Social Security numbers (or ITINs for qualifying parents) for all adults and children in the household, an email address to create an account, their address, and their banking information if they want to use direct deposit to get their payment. (If they do not have banking information, the IRS will send the CTC payment as a check to the address provided.)
8. There will be a second “change of circumstances” IRS portal soon. This new portal will be a place where families can report changes to their household including significant changes in income, changes to the number of qualifying children in their household, or their marriage status. Filers can also use the portal to change their bank account information or address. Families will also be able to use this portal to opt out of the monthly payments if they prefer to get their CTC as an annual lump sum when they file their annual tax return. This change of circumstances portal should be posted to the IRS website by the end of June and will be added to over time.
9. Receiving the expanded CTC will not impact your eligibility for means-tested programs. Getting the CTC payment will not change your eligibility for programs like Medicaid, the Supplemental Nutrition Assistance Program (SNAP), or Supplemental Security Income (SSI).
10. These expansions to the CTC are only for 2021. We urge lawmakers to make these expansions to the CTC permanent, or to extend them as President Biden has proposed in the American Families Plan. We should invest in children and families beyond this year. Extending the program can also ensure that we permanently reduce poverty.
For more information, see www.childtaxcredit.gov –>
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