The IRS is on track to send $300 Child Tax Credit payments in July
According to IRS Commissioner Charles Rettig, the Internal Revenue Service is on track to send monthly child tax credit (CTC) prepayments starting in July. Payments are worth up to $ 300 per child.
The agency is also launching a portal where taxpayers can update their information by July 1st.
"We will be on the market with the absolute best product we can put together by July 1," Rettig told the Senate Finance Committee on Tuesday. "We may need to tweak this ... but we're trying to make it as easy to use as possible."
The recently implemented US $ 1.9 trillion bailout plan provides a year-long expansion of the CTC that increases credit and enables distribution in regular payments. The law also requires the IRS to develop a portal through which taxpayers who are eligible for the credit can update their information such as income, marital status or dependents.
Here's what you need to know about monthly payments:
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How much is my payment?
Under the new legislation, the CTC rose to $ 3,000 per child under 18 and $ 3,600 per child under 6 for the 2021 tax year. Previously, the tax credit was $ 2,000 per child under the age of 17.
Half of the loan can be given to families over the next six months, starting in July and ending in December. Monthly payments are $ 250 for older children and $ 300 for children under 6 years of age.
Who is Eligible?
A single filer with children under 17 who earns up to $ 75,000 will receive full payment for each child, while those who earn up to $ 90,000 will receive a reduced amount. Joint applicants with children earning up to $ 150,000 will get the full credit for their child, while those earning up to $ 170,000 will get a lesser amount of the additional credits.
Individual applicants earning more than $ 200,000 and joint applicants earning more than $ 400,000 are eligible for the old CTC or $ 2,000 per child under the age of 17.
Read More: Here's what Joe Biden's $ 1.9 trillion "rescue plan" says that could help your wallet
The IRS will use your 2020 to determine if you are eligible for credit. The prepayments would be half a household's entitlement, while the remaining credit could be claimed on the 2021 tax return.
The CTC has also been made fully refundable - another provision lawmakers want to make permanent - allowing taxpayers to get the credit as a refund even if that is more than they owe in taxes.
Internal Revenue Service commissioner Charles P. Rettig testifies to the House Committee on Oversight and Reform in Washington, DC on October 7, 2020. (Photo by Tasos Katopodis / Getty Images)
Can the loan become permanent?
Legislators have called for the expansion of the CTC and the expanded Earned Income Tax Credit (EITC) to be made permanent.
"We must not allow these critical extensions to expire after a year," wrote 40 Democratic senators in a letter in March. "This would lead to a significant rise in child poverty after we took historic steps to end it. It would mean that millions of adult workers in difficulty would be taxed again in poverty."
President Joe Biden has previously expressed his support for extending the loan, but it is still unclear whether he will make it permanent.
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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
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