COVID-19 Benefits

$3,000 Child Tax Credit Payments – Stimulus 2021

If you are one of the 39 million American households that are set to get monthly payments from the expanded $3,000 or $3,600 child tax credit from the stimulus bill, we have some good news. Starting on July 15, IRS will begin sending payments to all eligible households. In this post, we will explain in detail how the $3,000 Child Tax Credit Payments will be sent, who is eligible, how much the monthly payments will be, and when payments will start.

Additionally, we will answer the most frequently asked questions about the Child Tax Credit Payments.

This post will cover:

  • $3,000 Child Tax Credit Payments Explained
  • FAQs about the Child Tax Credit Payments

$3,000 Child Tax Credit Payments Explained

In March 2021, President Biden signed a massive $1.9 trillion economic aid package that increased the existing $2,000 child tax credit for the 2021 tax year to $3,000 per child ages 6 to 17, and $3,600 for children under the age of 6, with new income phaseouts.

Up to half of the $3,000 or $3,600 expanded child tax credit can now be paid in periodic payments in 2021 through December.

Also, the rest of the fully refundable credit would be incorporated in the filers’ 2021 tax return next year.

All working families will get the full credit if they make up to $150,000 for a couple or $112,500 for a family with a single parent (also called Head of Household).

What is the cut-off income for the Child Tax Credit?

The child tax credit begins to phase out if your modified adjusted gross income (AGI) is above $400,000 on a joint return or over $200,000 on a single or head-of-household return.

Once you reach the $400,000 or $200,000 modified AGI threshold, the credit amount is reduced by $50 for each $1,000 of AGI over the applicable threshold amount.

The Modified AGI is the AGI shown on Line 11 of your 2020 Form 1040 (or Line 8b of your 2019 Form 1040).

Do all families qualify for the higher per-child tax credit of $3,000 or $3,600?

No, not all families with children will get a higher child tax credit.

However, most will.

If your modified AGIs is $75,000 on single returns, $112,500 on head-of-household returns, and $150,000 on joint returns.

The amount of the credit is reduced by $50 for each $1,000 (or fraction thereof) of modified AGI over the applicable threshold amount.

For example, if a married couple has one child who is four years old, files a joint return, and has a modified AGI of $160,000 for 2021, they won’t get the full $3,600 enhanced credit.

Instead, since their modified AGI is $10,000 above the phase-out threshold for joint filers ($150,000), their credit is reduced by $500 ($50 x 10) – resulting in a final 2021 credit of $3,100.

When will I get the Child Tax Credit?

Starting on July 15th, 2021, most families will automatically receive monthly payments of $250 or $300 per child without having to take any action.

If you’ve filed tax returns for 2019 or 2020, or if you signed up to receive a stimulus check from the Internal Revenue Service, you will get this tax relief automatically.

You do not need to sign up or take any action.

Is the child tax credit is fully refundable for 2021?

The expanded child credit is fully refundable for families who live in the United States for more than one-half of 2021.

It is important to note that before this change was implemented, certain low-income people could only get up to $1,400 per child as a refund.

Instead of the full $2,000 child credit, if their child credit exceeded the taxes they otherwise owed.

However, under the new rules for 2021, people who qualify for a child tax credit can receive the full credit as a refund, even if they have no tax liability.

Do you have to have a job or earned income to get the $3,000 Child Tax Credit Payments?

No, parents don’t need to be employed or otherwise have earnings in order to claim the child credit for 2021.

Here again, the previous rule limited the credit to families having at least $2,500 of earned income.

For 2021, families with no earned income can take the child credit if they meet all the other rules.

Is the $3,000 Child Tax Credit Welfare?

Unlike TANF or SNAP EBT benefits, or Food Stamps, the $3,000 child credit is not an entitlement program.

The expanded child tax credit is a fully refundable tax credit.

Will your child tax credit come via direct deposit or mail?

It is expected that the child tax credit will be sent in a similar fashion as the stimulus checks.

This means that it will be sent via direct deposit for those who have it set up, and mailed checks to those with no bank on file with the IRS.

Will the child tax credit reduce my 2021 tax return?

If you received the correct amount of advance payments, it will not reduce your tax return.

The expanded child tax credit is a fully refundable tax credit.

If you owe money when you file your 2021 taxes, your bill will be reduced by the amount you qualified for; or if you are due a tax return, that return will include the child tax credit amount.

However, if you were issued more money than you qualified for in advance payments of the child tax credit, it’s possible you may have to pay back some of the money.

Will the new child tax care credit become permanent?

Currently, no. Unless Congress acts, this $3,000 or $3,600 child tax credit will revert back to $2,000 per year starting in the 2022 tax season.

However, Democrats in Congress are pushing to extend it.

House Ways and Means Committee Chairman Richard Neal (D-Mass.) unveiled the Building an Economy for Families Act, a bill that would make the upped child tax credit permanent.

Making the $3,000 child tax credit permanent is already publicly supported by several Democratic Senators, including Senators Cory Booker (D-N.J.), Michael Bennet (D-Colo.), Sherrod Brown (D-Ohio), Ron Wyden (D-Ore.), and Raphael Warnock (D-Ga.).

However, it’s still unclear when Democratic leaders would try to push through such a change.

The White House recently announced a package including “family” policies it’s asking the Democratic-controlled Congress to pass.

Those policies include extending the $3,000 (or $3,600) child tax credit into 2025.

$3,000 Child Tax Credit Payments Summary

We hope this post on $3,000 Child Tax Credit Payments was helpful.

If you have further questions about Child Tax Credits, CalFresh, or California EBT Card, please let us know in the comments section below.

Be sure to check out our other articles about CalFresh and CalFresh EBT, including:
Restaurants that Take CalFresh in California
How to Apply for California P-EBT
California P-EBT Extension for 2020/2021
CalFresh for San Diego County
How much will I get in CalFresh in 2021?
How to Complete CalFresh SAR 7 Form
Get Printable CalFresh SAR 7 Form
CalFresh to see a 25% Increase in 2021

Kwame Kuadey

Kwame Kuadey writes about personal finance and the social safety net. His career started in banking but he caught the entrepreneurial bug and has spent the last decade building successful businesses, including an Inc. 500 Company. Kwame believes everyone has the power to improve their quality of life by seeking knowledge and taking action. In 2012, Kwame founded Empower Media to help low-income households improve their financial situation. His expertise is in topics relevant to low-income households, including government benefits and assistance, banking products, access to credit, plus tools & resources to help reduce income volatility and build wealth. Kwame has been featured in The Wall Street Journal, Forbes, Entrepreneur, Inc. Magazine, Washington Post, ABC, and NPR.

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