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Child Tax Credit: Families to start receiving $300 monthly payments July 15

"With two parents, two kids, that's $7,200 in the pockets that's going to help to take care of your family."

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Monthly payments of the new expanded Child Tax Credit will begin hitting parents' bank accounts this week, on July 15.

The payments of up to $300 per child per month are part of the American Rescue Plan President Joe Biden signed into law in March. In an effort to get cash to parents who have struggled with bills and child care throughout the Covid-19 pandemic, the relief bill temporarily boosted the size of the Child Tax Credit and moved up the delivery date.

Eligible parents can expect to receive half of the tax credit in cash payments before the end of the year. The second half of the credit will be applied when families file their 2021 taxes next spring.

The new and expanded Child Tax Credit is expected to dramatically reduce child poverty and will be distributed to about 39 million households, reaching 88% of all children in the U.S., according to White House estimates.

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The enhanced child tax credit: What you need to know

Video by Helen Zhao

From July to December, the monthly benefit will be directly deposited into most family's bank accounts on or around the 15th of every month, "without any further action required," the Treasury Department and the IRS said in a statement Monday. If the 15th falls on a holiday or weekend, the deposit will be made on the closest weekday to that date. After the first benefit this month, the IRS says families can expect subsequent payments on Aug.13, Sept. 15, Oct.15, Nov. 15, and Dec. 15.

Around 80% of the families that qualify for the tax credit already have direct deposit set up and do not need to take any additional steps, senior administration officials said this spring. The other 20% will get payments by check or debit card.

Calculate how much money you could get from the Child Tax Credit

To calculate your advance payments for the Child Tax Credit, the IRS will look at your 2020 income tax returns. If those returns haven't yet been filed or processed, the agency will use 2019 tax returns.

The maximum Child Tax Credit amounts to $3,600 per child under the age of 6, and $3,000 per child ages 6 to 17. You'll qualify for the full credit if you're a single filer with a modified adjusted gross income of less than $75,000, a single parent filing as head of household with a MAGI of less than $112,500, or a married couple filing jointly with less than $150,000 in income. The credit phases out for taxpayers with higher incomes.

Wealthier families who may not qualify for the enhanced credit in 2021 can still claim the previous Child Tax Credit of up to $2,000 per child, which begins to phase out at $200,000 in income for single or head-of-household filers and at $400,000 for married couples filing jointly. 

"With two parents, two kids, that's $7,200 in the pockets that's going to help to take care of your family," Biden said in his address to Congress on April 28. 

Check out Grow's calculator to determine how much you could be eligible to receive.

Families have the choice to opt out of the advance monthly payments

Families who prefer to wait to receive the full credit when they file their taxes next spring are able to opt out of monthly payments.

You can do so online using the IRS Child Tax Credit Update Portal. The IRS will make paper forms available for those who don't have internet access, IRS Commissioner Charles Rettig said in April testimony before the Senate.

It's too late to modify your information for the July payment. As of July 15, families could still make changes that would affect the August payment, though, including unenrolling or providing or updating bank account direct deposit information.

As of now, the enhanced Child Tax Credit will expire at the end of the year. However, a group of Democratic lawmakers has been pushing to make the benefit permanent.

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