The IRS plans to begin sending monthly payments from the new $3,000 child tax credit in July, Commissioner Charles Rettig said Tuesday during a hearing with the Senate Finance Committee.
The new and significantly expanded child tax credit was included in the $1.9 trillion American Rescue Plan signed into law by President Biden in March. Under the law, families will receive a $3,000 annual benefit per child ages 6 to 17 and $3,600 per child under the age of 6 for the 2021 tax year.
According to CNBC, the full $3,000 credit is available to individuals who have children and adjusted gross income of less than $75,000, or $150,000 for a married couple filing jointly. The extra benefit will phase out for taxpayers who make more money, and cease for individuals earning $95,000 and married couples earning $170,000 filing jointly.
Taxpayers that make more than that will still be eligible for the regular child tax credit, which is $2,000 per child under age 17 for families making less than $200,000 annually, or $400,000 for married couples.
The expanded credit is scheduled to be disbursed to families on a monthly basis starting in July and this will continue through December 2021. The monthly amounts will usually be $250 for older children and $300 for children under the age of six. Families will claim the remaining half of the credit when they file their 2021 income tax return in 2022.
Per CNBC, there is no limit on the number of children in a family that can receive the credit, as long as they meet the eligibility requirements around age and income. To receive the credit, families with children must file a 2020 tax return. If a family doesn’t file a 2020 return, the IRS will not have the information it needs to deliver the credit.