The IRS is on track to send $300 Child Tax Credit payments in July

The Internal Revenue Service is on track to send the monthly advanced payments for the Child Tax Credit (CTC) starting in July, according to IRS Commissioner Charles Rettig. The payments are worth up to $300 per child.

The agency is also launching a portal where taxpayers will be able to update their information by July 1.

“We will launch by July 1 with the absolute best product we are able to put together,” Rettig told the Senate Finance Committee on Tuesday. "We might need to adjust that… but we are trying to get it as user-friendly as possible.”

The recently-implemented $1.9 trillion American Rescue plan includes a one-year expansion of the CTC that increases the credit and allows it to be distributed in periodic payments. The legislation also requires the IRS to develop a portal where taxpayers eligible for the credit can update their information like income, marital status, or dependents.

Here’s what you need to know about the monthly payments.

How much will my payment be?

Under the new legislation, the CTC increased 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 17.

Half of the credit may be advanced to families over the next six months beginning in July and ending in December. The monthly payments will be $300 for older children and $250 for children under 6.

Who is eligible?

A single filer making up to $75,000 will receive the full payment, while those earning up to $90,000 will get a reduced amount. Joint filers making up to $150,000 will get the full credit, while those earning up to $170,000 will receive a smaller amount of the additional credit.

Single filers making over $200,000 and joint filers making over $400,000 will be eligible for the old CTC or $2,000 per child under 17.

Read more: Here's what's in Joe Biden's $1.9 trillion 'rescue plan' that could help your wallet

The IRS will look at your 2020 when determining whether you’re eligible for the credit. The advance payments would be half of what a household is eligible for, while the remaining credit can be claimed on their 2021 tax return.

The CTC was also made fully refundable — another provision lawmakers want to make permanent — which allows taxpayers to still get the credit as a refund even if that is more than they owe in taxes.

Can the credit become permanent?

Lawmakers have been calling for making permanent the expansion of the CTC and the expanded Earned Income Tax Credit (EITC).

"We must not allow these critical expansions to expire after one year," 40 Democratic senators wrote in a letter in March. "Doing so would result in a significant spike in child poverty, after we have made historic strides to end it. It would mean that millions of struggling adult workers would once again be taxed into poverty."

President Joe Biden has previously expressed support for extending the credit, but it is yet unclear whether he wants to make it permanent.

Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

Read more:

  • Jobs aren't bouncing back for Black Americans — and it could be worse than reported

  • Many taxpayers are still waiting to get last year’s tax refund

  • Rich Americans avoid taxes even more than anyone realizes, analysis finds

  • Read more personal finance information, news, and tips on Cashay

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and Reddit.

Source: Read Full Article