IRS sending child tax credit letters this week, payments as soon as July 15, agency says – NJ.com

Keep an eye on your mailbox for new information on the expanded child tax credit from the $1.9 trillion American Rescue Plan.

The Internal Revenue Service is sending out this week new information on the credit, which could pay as much as $3,600 per child for eligible families.

More than 36 million families who may be eligible for the credit based on their 2019 or 2020 tax returns, or if they used the IRS’ Non-Filers tool last year, will receive letters from the IRS about the credit., it said Then families will receive a second, personalized letter listing an estimate of their monthly payment, the agency said.

The expanded credit, which will begin to be paid out in monthly installments as soon as July 15, is part of the American Rescue Plan, which was signed into law in March.

“Most families do not need to take any action to get their payment. Normally, the IRS will calculate the payment amount based on the 2020 tax return,” the IRS said. “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.”

Eligible families will begin monthly advance payments on the credit, either by direct deposit or check, issued on July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15. The rest of the credit can be taken on a taxpayer’s 2021 tax return.

Under the new bill, parents will get $3,600 per child up to age six, and $3,000 per child ages 6 to 17. This is the first time 17-year-olds are included in the credit.

To qualify, the child needs a Social Security number and must have lived with the taxpayer for at least six months during the year.

Singles with adjusted gross income of up to $75,000 would get the full amount, as would married couples filing jointly who earn up to $150,000.

The credit would then phase out, going down by $50 for every additional $1,000 of income.

Those who are not eligible for the higher amounts can still claim $2,000 per child — the previous amount available — as long as adjusted gross income is below $200,000 for singles and $400,000 for those married filing joint returns.

The IRS is urging those who haven’t yet filed their 2020 or 2019 tax return to do so as soon as possible so they can receive any advance payment they’re due. You can do that using IRS Free File.

“Filing soon will also ensure that the IRS has their most current banking information, as well as key details about qualifying children. This includes people who don’t normally file a tax return, such as families experiencing homelessness, the rural poor, and other underserved groups,” the IRS said.

The IRS said it will soon be adding additional online tools related to the credit.

One will allow families to skip the advance payments and instead receive the full amount on their 2021 return. There will also be a “Child Tax Credit Update Portal” where taxpayers can tell the IRS of changes in their income, filing status or number of qualifying children. People will also be able to update their direct deposit information and “make other changes to ensure they are receiving the right amount as quickly as possible.” It will also allow people to check on the status of their payments and be available in Spanish, the IRS said.

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Karin Price Mueller may be reached at KPriceMueller@NJAdvanceMedia.com.