The IRS (Internal Revenue Service) upgraded a key online tool to enable families to quickly and easily update their bank account information so they can receive their monthly Child Tax Credit payments.
The bank account update feature was added to the Child Tax Credit Update Portal, available only on IRS.gov. Any updates made by August 2 will apply to the August 13 payment and all subsequent monthly payments for the rest of 2021.
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What is Child Tax Credit?
A child tax credit (CTC) is a tax credit for parents with dependent children given by various countries. The credit is often linked to the number of dependent children a taxpayer has and sometimes the taxpayer’s income level. For example, in the United States, only families making less than $400,000 per year may claim the full CTC. Similarly, in the United Kingdom, the tax credit is only available for families making less than £42,000 per year.
But low-income families who owed less in taxes than the amount of the deduction previously could only receive part of that deduction. Under the revisions to the tax credit, children as old as 17 now count as qualifying dependents, and low-income families can now receive the full value of that tax credit, even if they have no earned income.
The amount per child also is higher for most families, increased to $3,000 for each child between 6 and 17 years old and $3,600 for each child under age 6. And the biggest change will be the monthly checks, which will provide essentially a guaranteed stipend to families.
Who is eligible for Child Tax Credit?
Families can receive the full credit if their income is less than $75,000 for households with a single filer, $112,500 for head-of-household filers, and $150,000 for married couples filing jointly.
The increased credit phases out above those income amounts. Those making more than $144,500 as a single filer and $182,000 as a married filer are eligible for the previous $2,000 per child.
The structure puts single parents at a disadvantage, capping their credits compared to what married parents would receive. Rep. Katie Porter, (D-Calif.), a single mom, has pushed to make those filing as heads of household — as single parents typically do — eligible for the same amount as married couples.
Those eligible to receive the monthly payments might have received a letter from the Internal Revenue Service in the past few weeks detailing the tax credit and how much they will receive.
How does Child Tax Credit Works?
Families who filed tax returns for 2019 or 2020, or who signed up to receive a stimulus check from the Internal Revenue Service, do not need to do anything to begin receiving the monthly payments. Parents who didn’t file taxes should use an online IRS tool, called the “non-filer sign-up tool,” to get their money.
The payments will be made on the 15th of each month through December, except for August, when it is scheduled for the 13th because the 15th falls on a weekend.
Families that would prefer to receive their credit as a lump sum next year can opt-out of payments starting in August using the online IRS portal, where they also can update bank account information.
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