When to expect child tax credit payments to arrive in your bank account

The IRS has released a payment schedule for the highly anticipated child tax credit that will hit bank accounts over the next six months beginning in mid-July.

More than 36 million U.S. families received letters this week informing them of their potential eligibility if their 2019 or 2020 federal income tax return have been filed.

What to expect

The payments will be sent by check or direct deposit on July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15, according to a statement from the Treasury Department.

And that’s not all.

Another payment would come in a lump sum with tax refunds in April 2022, according to previous reporting.

The plan was set up this way to get money in pockets sooner rather than making people wait to file next year’s taxes, but there’s also an option to unenroll from receiving advance payments and instead receive a lump sum credit when filing a 2021 return.

Eligible families have the potential to receive up to $3,600 per child in the form of $300 monthly installments on top of the $1,400 stimulus checks and unemployment benefits that have already been doled out to millions of Americans amid the now-waning coronavirus pandemic.

The credit temporarily increases the existing child tax credit from a maximum $2,000 a year per child and will be paid out in advance of next year’s tax filing season.

For children ages 5 and under, the new credit is $3,600, or $300 a month; and for ages 6 to17, the new credit is $3,000, or $250 a month.

What’s next

Taxpayers should next be on the lookout for a second personalized letter in the mail that will list an estimate of their monthly payment, which are being provided as part of President Joe Biden’s groundbreaking $1.9 trillion pandemic relief law known as the American Rescue Plan Act.

Most families do not need to take any action to get the payment.

The Treasury Department is encouraging eligible families to file their 2019 and 2020 tax returns as soon as possible to receive the advance payments. The fastest and easiest way to file a return is by using the Free File system on IRS.gov.

Typically, the IRS will calculate the payment amount based on the 2020 tax return. If that return is not available, either because it has not yet been filed or it has not yet been processed, the IRS will instead determine the payment amount using the 2019 return.

Later this year, individuals and families will also be able to go to IRS.gov and use a Child Tax Credit Update Portal to notify IRS of changes in their income, filing status or number of qualifying children; update their direct deposit information; and make other changes to ensure they are receiving the right amount as quickly as possible.

The IRS has created a special Advance Child Tax Credit 2021 page with the most up-to-date information about the credit and the advance payments.

Reaction on the Hill

Democratic lawmakers have indicated they want to make the expanded and advance child tax credit a permanent change.

By including the child tax credit in the American Rescue plan, congressional Democrats sought to address income inequality and provide support to parents who were forced to cut down on work or give up jobs to take care of children after losing access to child care. According to some estimates, the credit will reduce the number of children living in poverty in the U.S. by more than half.

Republicans, however, have criticized the initiative as an expansion of welfare, saying it removes the incentive for parents to seek work.

The new child tax credit “is not targeted to pandemic relief, and risks the loss of billions of taxpayer dollars in fraudulent and improper payments,” Rep. Kevin Brady of Texas, the senior Republican on the House Ways and Means Committee, wrote in letters to Biden administration officials.

At a recent hearing, Sen. Charles Grassley, R-Iowa, said he was concerned the new tax benefit will remake the IRS’ role into a “social welfare-oriented” agency.