Many families will soon begin receiving monthly payments from the IRS as part of the credit that was included in the American Rescue Plan.
Some have already received a rather confusing letter about the program. Here's what parents should understand about the program:
When Democrats in Congress passed the most recent stimulus package in March, the $1.9 trillion American Rescue Plan, it included an expansion of the Child Tax Credit this year. Instead of $2,000, the credit grows to $3,000 per child for those age 6 through 17 and $3,600 for children under age 6.
The law also calls for the IRS to send families monthly advance payments for half the amount you're owed starting in July and running through the end of the year.
So if you're owed $3,000, you'll get $250 a month for 6 months and will collect the other $1,500 when you file taxes.
In order to qualify, the family must have filed either a 2019 or 2020 tax return. Qualification for the payments is based on the reported income and begins to phase out starting at $75,000 for single filers or $150,000 for a couple.
Congress also made the child tax credit this year fully refundable, which means you can collect it even if you don't owe any money in taxes.