But in just a few short weeks—July 15 to be exact—an estimated 90 percent of all American families with children will be in line to receive recurring monthly payments via the expanded child tax credits that were green-lighted by President Joe Biden’s ambitious American Rescue Plan.
That $1.9 trillion stimulus bill will direct the Internal Revenue Service to begin issuing the monthly checks through the end of the year. Eligible parents can expect to collect as much as $3,600 per year for a child under the age of six and up to $3,000 for children between ages six and seventeen—amounting to a $250 or a $300 monthly cash payment for each child.
But what about the other 10 percent of families who won’t be getting a dime from the federal government? It appears that most parents who earn less than $75,000 as individuals and $150,000 as married couples should be fine. However, do take note that some people will only receive a partial amount, such as an individual who earns an adjusted gross income of $240,000 or less. For married couples, a similar phased-out payout could occur if they make $440,000 or less.
Keep in mind that the IRS is directed to issue advance payments of the child tax credit in periodic installments. Since these funds are largely based off the agency’s estimates on available data—such as income, marital status, and number and age of qualifying dependent children—there could potentially be inaccurate data that do, in fact, trigger an overpayment. In such a case, that money will have to be paid back during tax season next year.
Also, be aware that there won’t be double payments heading out to divorced parents who share custody of a child. The IRS says that each dependent can only be claimed by one taxpaying parent—meaning only one check will be sent for each child.
In some cases, the one parent who has custody of the child for more time will receive the money. But in other cases, the parent with a higher adjusted gross income can claim the credit.
In an effort to help parents determine their eligibility for the credits, the IRS recently launched a new tool called the Child Tax Credit Eligibility Assistant, which is available exclusively on IRS.gov.
The portal allows parents to answer a series of questions about themselves and their family members that will in the end determine whether they indeed qualify for the child tax credit payments.
Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.