The Internal Revenue Service unveiled a sign-up tool on its website Monday that will allow users to provide the necessary information about their households and, if they chose, about their bank accounts so the agency can directly deposit the funds.
Most households don’t have to do anything to get the child tax credit since the IRS already has their 2020 or 2019 returns. Roughly 39 million households, covering 88% of children, will start receiving the monthly payments on July 15.
Eligible parents will get $300 a month for each child under age 6 and $250 for each one ages 6 to 17. The payments, which will run through the end of the year, will provide families with half the enhanced credit. They can claim the other half on their 2021 tax returns next year.
A second portal, which will be available in coming weeks, will allow families to opt out of receiving the advanced monthly payments, instead collecting the entire expanded credit at tax time. It will also let people check on the status of their monthly payments and update their information.
And the IRS will provide a tool to help families determine whether they qualify for the monthly payments.
Sending more money to families for 2021
The enhanced credit, which is only in place for 2021, stems from the Democrats’ $1.9 trillion coronavirus rescue package.
It gives families up to $3,600 for each child under 6 and $3,000 for each one under age 18. This is up from the existing credit of up to $2,000 per child under age 17. The enhanced portion of the credit will be available for single parents with annual incomes up to $75,000, heads of households earning $112,500 and joint filers making up to $150,000 a year.
The package also makes the tax credit fully refundable so that more low-income parents can take advantage of it. Until now, it has only been partially refundable — leaving more than 20 million children unable to get the full credit because their families’ incomes are too low.
Lawmakers also wanted to make it easier for parents to use the funds to cover their expenses during the year so they are providing half of the enhanced credit in monthly payments.
The provision is projected to cost roughly $110 billion a year.