The IRS and the U.S. Department of the Treasury have announced further details about the expanded Child Tax Credit (CTC). This new credit is a part of the American Rescue Plan and is extended for the 2021 tax year only. This plan increases the maximum Child Tax Credit in 2021 to $3,600 for children under the age of six and to $3,000 per child for those between the ages of 6-17.
This tax credit is designed to lift more than five million children across the country out of poverty this year. The CTC payments will be made to qualifying families on the 15th of the month unless that falls on a holiday or a weekend. The first payment will be made on July 15, 2021. The payments will be made via direct deposit, paper check or debit cards. As far as how much each monthly payment will be for- eligible families can look to receive up to $300 per month for each child aged six and under and up to $250 per month for each child aged six and above.
Taxpayers making up o $75,000 a year and filing a single return are eligible. So are heads of households making $112,500 annually and married couples filing jointly who make $150,000 per year. Those who don’t meet these requirements will see a phase out to the credit in increments. Those making up to $200,000 a year will still qualify for the $2,000 original CTC.
It is projected that roughly 39 million households will receive payments. That covers 88% of U.S. children.
For more information about the CTC, please visit the IRS website. Also, reach out to Holbrook & Manter with any questions you may have.