Parents, check your bank accounts on Thursday, July 15. That’s when the first installment of the advance child tax credit payments are scheduled for direct deposit. If the IRS doesn’t have your direct deposit information, you’ll receive your payment...
Parents, check your bank accounts on Thursday, July 15. That’s when the first installment of the advance child tax credit payments are scheduled for direct deposit. If the IRS doesn’t have your direct deposit information, you’ll receive your payment by check.
The IRS hasn’t said what time funds will become available. However, with the third round of stimulus checks, funds were generally available to bank and credit union customers at 9 a.m. local time.
How Much Are the Payments?
Parents with children younger than 6 will receive a total credit of $3,600. Half of those payments will be made in monthly installments of $300 a month over six months, while the remaining $1,800 will be paid as a credit when you file your tax return in 2022.
The credit for children ages 6 to 17 is $3,000. Parents will receive $250 a month over six months, then receive the remaining $1,500 next year at tax time.
How Do I Know if I Qualify?
Essentially, if you were eligible for the full amount of the three stimulus checks, you should qualify for the full amount of the credit for each dependent child who will be 17 or younger on Dec. 31, 2021. A child is considered your dependent if you provide more than half of their support for the tax year.
The credit begins to phase out at the following income levels:
$75,000 for single filers $112,000 for heads of household $150,000 for married couples filing a joint returnYou can use the child credit update portal on the IRS website to verify that your payment has been scheduled. The IRS also sent letters to 36 million families notifying them that they’re eligible for the credits.
Do I Have to Do Anything to Get the Credit?
Probably not. In most circumstances, if you filed a 2019 or 2020 tax return, the IRS can obtain the information it needs to process your payment. If you aren’t required to file a return but used the non-filer tool to get your stimulus check last year, you probably don’t need to take further action. However, if you haven’t filed taxes for 2019 or 2020 and you didn’t receive the stimulus checks, you may need to use the non-filer tool to register.
There are a few other circumstances where you’d need to take action. For example, if you had a child in 2021, you’ll need to enroll to receive advance payments. Otherwise, you’ll have to wait and receive the full credit when you file next year’s return. Likewise, if you had a child in 2020 but the IRS used your 2019 return to determine your credit, you also may need to enroll.
Currently, there’s no way to add dependents. However, the IRS says it will feature an option on its website to do so later this summer.
When Will I Get the Other 5 Payments?
The remaining five payments will be made on the following schedule, according to the IRS.
Aug. 13 Sept. 15 Oct. 15 Nov. 15 Dec. 15Can I Opt Out of the Advance Child Credit
Parents can opt out of receiving the advance credits if they’d rather receive a larger tax refund next year. If your income was below the phase-out thresholds in 2020 or 2019 but you expect it to be above these levels in 2021, you might want to opt out of the advance payments to avoid owing part of the money back next year.
It’s too late to opt out of July’s credit, but you can use the update portal to opt out of future advance payments. The deadline for opting out of the Aug. 13 payments is Aug. 2.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to AskPenny@thepennyhoarder.com.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.