The Internal Revenue Service has started sending letters to more than 36 million American families who may be eligible to receive expanded monthly Child Tax Credit (CTC) payments starting in July.
The expanded credit was authorized by the American Rescue Plan Act in March and applies to 2021 only. “The letters are going to families who may be eligible based on information they included in either their 2019 or 2020 federal income tax return or who used the non-filers tool on IRS.gov last year to register for an economic impact payment,” the IRS said in a press release today.
Families claiming the CTC will receive payments at the end of the year of up to $3,000 per qualifying child between the ages of 6 and 17 and $3,600 per qualifying child below the age of 6. That's an increase from the prior credit law, which provided a $2,000 credit per qualifying child under the age of 17 at the end of the year.
Monthly advance payments of the 2021 credit will be made starting in July to eligible taxpayers who have a main home in the U.S. for more than half the year, the IRS said.
Eligible families will receiving advance payments either by direct deposit or check. Payment will be up to $300 per month for each qualifying child under age 6 and up to $250 per month for each qualifying child ages 6 to 17. The total of the advance payments will be up to 50% of the credit, the IRS said.
The credit for qualifying children is fully refundable, which means that taxpayers can benefit from the credit even if they don't have earned income or don't owe any income taxes, the IRS said.
The credit will include children who turn age 17 in 2021, according to the agency.