How the Child Tax Credit Provides Critical Support for Families

Even as employment numbers rise and strains on household budgets have improved in recent months, one in four adults still report trouble paying for usual household expenses, and an estimated 37 percent of children currently live in households that face this difficulty. 

Financial strain paired with chronic stress has catastrophic consequences for children and families. But for many families, the recently expanded Child Tax Credit will help alleviate some of this stress and offer critical support. 

The first round of Child Tax Credit payments began several months ago, providing up to $3,600 per child under the age of 6 and up to $3,000 for children ages 6–17. Keep reading to learn more about this program and why it matters. 

Q: What’s the Child Tax Credit? 

A: For decades, the Child Tax Credit has served to support families as they navigate the general cost of raising children—but it was previously only available when parents filed their taxes, not sent on a monthly basis. The original CTC also excluded millions of families who had low income or were unemployed. 

In March 2021, the White House administration included an update and expansion to the CTC as part of the American Rescue Plan Act (ARPA). This expansion now ensures that millions of families who were previously ineligible for the CTC are now able to receive it—and it also increased the amount of funding provided. 

Monthly payments for the CTC began July 15th, 2021, and will continue monthly for one year. 

Q. Who’s eligible for the Child Tax Credit?

A: Most families with children qualify for the Child Tax Credit. 

If you filed your tax return jointly with an income below $150,000, or if you’re a single head of household with an income below $112,500, your credit will be deposited directly into the bank account you have on file with the IRS. If you don’t have a bank account set up with the IRS, payments will be sent via check. 

Due to changes of the CTC in the American Rescue Plan, you don’t have to be employed to receive CTC benefits. Even if your family currently has no income, you are still eligible. 

If you have additional questions about your eligibility, find more information here. 

Q: How do I sign up for the Child Tax Credit? 

A: If you filed your taxes in 2020 or 2019, you should automatically receive your CTC via direct deposit or by check. If you have not filed taxes in the past two years, click here to sign up for the CTC payments. Most families will receive the monthly payments automatically, beginning July 15th. 

Q: How much money will my family receive? 

A: It depends on the age of your children: monthly payments amount to $300 per child under the age of 6, and $250 per child ages 6–17. This amount is available to married couples with up to $150,000 in adjusted gross income, and single parent families with up to $112,500. 

Q: Can I opt out of the Child Tax Credit?

A: Although the CTC is an automatic opt-in, you do have the option to unenroll using the IRS online portal three days before the first Thursday of the next month. For parents who are married and filing jointly, both spouses must unenroll. Families who opt-out will receive the cash benefit in one lump sum during tax time. 

Learn more about how to opt out of the CTC from the IRS here. 

Q: Do I have to pay taxes on the Child Tax Credit? 

A: Yes. Unlike the stimulus checks received earlier this year, CTC payments will be counted on your tax returns. 

Q: What is the long-term impact of the Child Tax Credit?

A: The American Rescue Plan is projected to cut child poverty in half by 2021—and the one-year expansion of the CTC accounts for the bill’s impact on fighting poverty. 

Racial disparities are also expected to be improved by the CTC. Estimates note that the CTC may cut poverty by 62 percent for Indigenous children, 52 percent for Black children, 45 percent for Hispanic children, and 37 percent for Asian American and Pacific Islander (AAPI) children. 

Q: How long does this extension last? 

A: The CTC is a temporary expansion and only applies for tax year 2021. Organizations, such as the Children’s Defense Fund, are fighting to ensure that the government passes legislation that includes a permanent expansion and improvements to the CTC.

Q: Where can I find more information?

A: Check out the IRS’s website for more details on the CTC: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021