10 Things to Know about the Expanded Child Tax Credit
By Ashley Burnside
Lawmakers have temporarily expanded the Child Tax Credit (CTC) available to families with children in 2021. This policy is anticipated to reduce child poverty by nearly half—and to have even greater benefits for Black children, Latinx children and Indigenous children who were disproportionately likely to be denied the full value of the federal credit under prior law because they earned too little. This will make a huge difference in helping parents with the costs of caregiving and in promoting positive childhood development. Despite the wide-reaching benefits this program will have for children and families, parents are still uncertain about how the program will work.
Here are ten things you should know about the new expanded CTC program:
- 1. The American Rescue Plan increases the CTC available to families. The new expanded CTC will be $3,600 per year per child ages 0-5 and $3,000 per year for children ages 6-17. These funds can help parents afford necessities like diapers, school supplies, and food. But this increase in the CTC payments has only been approved for 2021.
- 2. Families started getting their monthly payments in July. Parents who are eligible for the CTC began getting the payments in monthly installments in mid-July and they will continue through December 2021. When families file their taxes in 2022, they will get the remaining CTC benefit they didn’t get through the monthly installments.
- 3. Families will get their CTC payments either by direct deposit or mail. The Internal Revenue Service (IRS) will use the banking information it already has on file for families to distribute the CTC payments. An estimated 80 percent of families should automatically get their CTC payment by direct deposit. The remaining families will get it by mail using the address the IRS has on file. Parents can use the IRS CTC update portal to provide or update their bank information. In August, they will be able to use the same website to make changes to their mailing address.
- 4. Most children will be eligible for the CTC. An estimated 90 percent of children in the United States will automatically get the CTC. Even if a parent is making little to no income, they can still be eligible for the new CTC. Married couples making $150,000 per year or less are eligible to receive the full CTC benefit. The benefit will phase out as their income increases above that threshold. For heads of households, the income threshold to receive the maximum CTC benefit is $112,500. Typically, children must live with the adult in the United States for more than half of the year to be eligible for the CTC.
- 5. Mixed-immigration-status families can be eligible for the CTC. If a child has a Social Security number and their parent(s) have an Individual Taxpayer Identification Number (ITIN), they can get the CTC if they meet the other income and eligibility requirements. We urge lawmakers to make kids without Social Security numbers eligible for the CTC, as they were prior to the passage of the Tax Cuts and Jobs Act of 2017. You can learn more about mixed-immigration-status CTC eligibility here.
- 6. About 39 million families will get the CTC automatically. If you filed a tax return in 2020 or 2019 or used the Economic Impact Payment (EIP) (commonly referred to as “stimulus payments”) non-filer portal last year, you will automatically get the CTC monthly until December. The IRS will use the information it already has on file to distribute the CTC payments, meaning most families will not have to take any additional action to get their CTC payments. You can check to see if you’re enrolled to receive the advance CTC payments using the IRS CTC update portal.
- 7. Other families who don’t plan to file taxes can use the IRS non-filer portal. Couples making under $24,800 annually and heads of households making under $18,650 can use the new IRS non-filer portal to claim the CTC. Families will need the full names and Social Security numbers (or ITINs for qualifying parents) for all adults and children in the household, an email address to create an account, their address, and their banking information if they want to use direct deposit to get their payment. If they do not have banking information, the IRS will send the CTC payment as a check to the address provided. You can find a guide on how to use the CTC non-filer portal here.
- 8. The IRS CTC “update” portal allows families to unenroll from monthly payments and to update their information. This portal is a place where families can provide or update their banking information. In the coming months, families will be able to report other changes to their household including significant changes in income, changes to the number of qualifying children in their household, or their marriage status, and changes to their address. Families can also use this portal to opt out of the monthly payments if they prefer to get their CTC as an annual lump sum when they file their annual tax return. This portal will be added to over time. You can find a guide on how to use the CTC update portal here.
- 9. Receiving the expanded CTC will not impact your eligibility for means-tested programs. Getting the CTC payment will not change your eligibility for programs like Medicaid, the Supplemental Nutrition Assistance Program (SNAP), or Supplemental Security Income (SSI).
- 10. These expansions to the CTC are only for 2021. We urge lawmakers to make these expansions to the CTC permanent, or to extend them as President Biden has proposed in the American Families Plan. We should invest in children and families beyond this year. Extending the program can also ensure that we permanently reduce poverty.
For more information, see www.childtaxcredit.gov -->