The new child tax credit payments start this week

The Internal Revenue Service is hoping to reach millions more low-income families as it starts to roll out the massive expansion of the child tax credit this week.


Melinda Williams, a married mother of five, didn't think her family qualified for the child tax credit since they don't earn enough to file income tax returns. So the New York City resident didn't pay much attention to Congress' historic increase of the benefit earlier this year.

But then her pastor, Bishop Mitchell Taylor of Center of Hope International, last week told her that the expanded credit could be worth $3,000 for each of her kids for 2021. Williams made an appointment at Urban Upbound, a free tax prep center Taylor founded, for the next day and filed a 2020 return, which will allow the Queens family to receive not only the monthly child tax credit payments but several stimulus payments they missed out on.

Williams plans to use the funds to cover some expenses, as well as school supplies and clothing for her two girls and three boys, who range in age from 7 to 17 -- and she and her husband also hope to sock away some money to pay for college and buy a home one day.

"It's anxiety reducing," said Williams, a stay-at-home mom, of what the new benefits mean for her. "It's not stressing, wondering what you are going to do if the money runs out before the month is over."

The Internal Revenue Service is hoping to reach millions more low-income families like the Williamses as it starts to roll out the massive expansion of the child tax credit this week. Getting the funds to these households is crucial to the Biden administration and congressional Democrats' goal to reduce child poverty nearly in half for 2021 through the beefed-up benefit.

As part of the enhancement, half the credit will be sent to households in monthly installments. The payments begin July 15 and run through the end of the year.

Most parents don't have to do anything to get the funds since the IRS already has their 2020 or 2019 returns showing they claimed the regular child tax credit, which was $2,000 for each child up to age 17 until this year. Roughly 39 million households, covering 88% of children, will start receiving the monthly payments automatically. The IRS has sent more than 36 million letters to parents informing them of the enhanced credit and their potential eligibility.

But those who haven't filed their returns or used the agency's non-filer tool last year to receive the stimulus checks must take action to get the child tax credit payments. Exactly how many children are in these families isn't known, but it's estimated to be around 5 million.

Reaching these families, however, won't be easy. The effort also relies on thousands of community groups across the nation, which are trying to both educate parents about the enhanced credit and spur them to file returns or register on the IRS website, both of which could require lots of assistance.

A beefed-up child tax credit

Eligible parents can get half their credit -- up to $300 a month for each child under age 6 and up to $250 for each one ages 6 to 17 -- from now through the rest of the year. They can claim the other half when they file their 2021 taxes next year.

The payments stem from the Democrats' $1.9 trillion American Rescue Plan, which beefed up the existing child tax credit, giving families up to $3,600 for each child under 6 and up to $3,000 for each one age 6 to 17 for 2021. The full enhanced credit will be available for heads of households earning $112,500 and joint filers making up to $150,000 a year, after which it begins to phase out.

Also key to fighting poverty: The relief package makes the tax credit fully refundable so that more low-income parents can take advantage of it. It had been only partially refundable -- leaving roughly 23 million children unable to get the full credit because their families' incomes are too low.

The expanded credit, however, is only in place for 2021, though Democrats hope to extend it.

The child tax credit checks are not additional payments. They are partial advances on the credit those taxpayers would have received any way when filing their taxes for 2021.

"The IRS will pay half the total credit amount in advance monthly payments beginning July 15. You will claim the other half when you file your 2021 income tax return. These changes apply to tax year 2021 only," the IRS explains on its website.

Who qualifies for the child tax credit?

To qualify for the child tax credit:

  • You must have filed your 2019 or 2020 tax return, claiming the credit.
  • Have a valid social security number for children under 18.
  • You must have given the IRS information in 2020 to receive the most recent economic impact payment, also known as a stimulus check.

Americans who qualify will be automatically enrolled in the program. There are also income limits. You can see if you’re eligible on this IRS page here.

Should you take the credit?

Some financial experts suggest opting out of the monthly payments and instead claiming the full credit on your 2021 tax returns. Those advisors say that option can protect families from surprise amounts when filing taxes for the next year.

If you did not unenroll for the credit before June 28, you will receive the payment for July 15.

If you want to opt-out of the advance payments and wait for the credit later, you can use the IRS child tax credit portal.

The second payment is scheduled for Aug. 13.