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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 on July 15, the Biden administration announced Monday.

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.

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.

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 Sunday. 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 will 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 2021 taxes will be able to access an online portal that will allow them to opt out of monthly payments. The IRS plans to make that portal available by July 1.

The IRS will make paper forms available for those who don't have internet access, Commissioner Charles Rettig said last month in testimony at a Senate committee hearing.

Confirm the IRS has your up-to-date info to receive the maximum credit

The IRS plans to create another portal so taxpayers can update information about changes in their income, filing status, or their number of qualifying children. More details about how to access those portals will be announced later, senior administration officials said.

As of now, the enhanced Child Tax Credit will expire at the end of the year. However, last month, Biden introduced his American Families Plan, which proposes to extend the tax benefit through 2025. He previously said the administration will push to make the benefit permanent.

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