Parents to receive extra child tax payments: What you need to know about the temporary child tax credit expansion for 2021


Another round of stimulus payments will roll out next week, and most families with children automatically qualify, even if they know little or nothing about it.

Starting next week, millions of American families will receive the first of six monthly payments of up to $300 per child from the federal government. Two state economists spoke recently to The Sumter Item on its various impacts.

The temporary expansion of the child tax credit has been a little under the radar. The country is busy attempting to return to some sense of normalcy with the brunt of the pandemic hopefully behind us, but that is coupled with concern about the spread of the Delta variant among unvaccinated people.

Amid that, the payments are the latest stimulus measure for families with children from the $1.9 trillion American Rescue Plan that passed in March.


The payments represent a temporary expansion of the up to $2,000 per child tax credit that parents usually receive when they file their taxes each spring. About 90% of American families are eligible, according to the Internal Revenue Service.

The purpose for the expanded credit addresses the situation where many parents have had to stop working since the pandemic and stay home with their children, especially given virtual learning in K-12 schools. The funding will now theoretically help families with childcare so more adults can get back into the labor market.

University of South Carolina economist Joey Von Nessen described the current job market as the strongest it has been in probably a decade and said the payments could draw more people out into the labor force and help employers fill vacancies.

Essentially, for tax year 2021, eligible families will receive more money per child - and they do not have to wait until they file their tax return to receive the funds. Instead, they will receive half in monthly payments throughout the second half of this year (July through December).

To receive the advance payments, which begin this upcoming week, the vast majority of eligible families will not have to do anything, according to the IRS, which is distributing the money. The payments will be automatically deposited into recipients' bank accounts or mailed as checks, depending on how individuals get their refunds from the IRS.

The full amount of the expanded child tax credit - available for married couples filing jointly with incomes up to $150,000, single filers with income under $75,000 and "head of household" filers up to $112,500 - is $3,600 for every qualifying child 5 and younger and $3,000 for every qualifying child ages 6-17.

The credit begins to shrink or phase out above those income levels and drops to zero at higher incomes ($240,000 for unmarried taxpayers and $440,000 for married couples), according to the Congressional Research Service in Washington.

Even families who do not earn enough money to pay taxes are eligible for the credits, and getting part of the credit as monthly payments is a big win for low-income families.

"It will benefit us because it's extra money," a father of four from Sumter said. "By them giving that, it will be stress free on my back."

The father, who wished to remain anonymous but was connected to The Sumter Item through Midlands Fatherhood Coalition, has three biological children and cares for another and described the credit as a big help that will lift weight off his shoulders. He will only qualify for his oldest biological daughter, who is 4, while the mother of his other children has filed taxes in previous years for the rest.

He said he makes about $19,200 a year. He should qualify for a monthly payment of $300 from July to December and file for the remaining half in his taxes next year.

Although he will only receive money for just one of the four children in his care, he said it will help him provide more essentials to the children or allow him to start saving money for them.

"It will be more income for me, and it will help out a lot for me to get them extra clothes, extra food … anything extra will help," he said. "I can start saving some for them, too, so that will be a help."


Starting Thursday, July 15, eligible families will receive $300 or $250 every month through December for each child in the respective age ranges. The remaining half can be claimed when filing 2021 tax returns early next year.

The payments will be made on the 15th of each month, except for August (when it is scheduled for the 13th because the 15th falls on a weekend.)


As stated with the temporary expansion of the child tax credit, the IRS will provide most parents between $3,000 and $3,600 for each child 17 years old and younger.

The money that families will receive in the monthly installments this year is an advance payment of the credit they will be eligible for in 2021, even though individuals will not file a return for it until next spring.

The IRS will use parents' most recent tax returns to estimate payments.

As Next Advisor, an online news agency in partnership with Time, explained in a recent article, people can estimate their payment using their filing status and adjusted gross income; their number of dependent children aged 5 and under on Dec. 31, 2021; and the number of children ages 6 to 17 on Dec. 31, 2021.

Next Advisor then did the math for some fictitious families to show the differences across various scenarios:

- No. 1. Single Filer: One child, age 6

A single mother who earns $30,000 in adjusted gross income. Her son will turn 6 before the end of 2021, so she qualifies for a total $3,000 Child Tax Credit. ($1,500 received in six monthly payments and then $1,500 associated with her taxes next spring.)

- No. 2. Married Filing Jointly: Two children, ages 17 and 12

A married couple are parents to two daughters, ages 17 and 12. They earn an adjusted gross income of $120,000. They can expect to get $6,000 total from the Child Tax Credit. ($3,000 total in six monthly payments, and then $3,000 associated with their taxes next spring.)

- No. 3. Married Filing Jointly: One child, age 1

A married couple are new parents and earn an adjusted gross income of $200,000. Their income places them beyond the limits for the expanded credit amount, but they are still eligible for a standard $2,000 Child Tax Credit for 2021 when they file their taxes.


If a family's adjusted gross income is above the income limits, the math starts to get more difficult. The credit phases out in $50 increments for every $1,000 above the threshold. Next Advisor gave the example of a mom who has an adjusted gross income of $80,000 with one eligible 4-year-old child, and she files individually. She would qualify for a $3,350 credit.

As scenario No. 3 above shows, phaseouts are limited to the increased $1,000 or $1,600 added to the tax credit under the new law. Even if a family's income phases it out of the expanded stimulus credit, the family may still qualify to claim the regular Child Tax Credit up to $2,000.


Eligible families who get their refunds from the IRS through direct deposit will see these payments in their bank account without any action.

If taxpayers don't use direct deposit, they will receive payments by mail.

The IRS encourages parents to use its Child Tax Credit Update Portal - - to ensure their bank account information on file with the IRS is correct. The federal agency also urges parents to consider switching to direct deposit. Recipients can access money faster via direct deposit, according to the IRS, and the method also eliminates the chance of a lost, stolen or undelivered check.

Parents can first check the portal to see if they are eligible for the payments then confirm if they will receive them through direct deposit. The tool also allows parents to notify of a change in the number of qualifying children (including the birth of a child), a change in their marital status or to note a significant change in income that may affect their credit amount.

The portal also allows parents to opt out of the advance payments and instead receive the full credit as a lump sum when they file their 2021 tax returns next spring. The deadline to opt out of the first payment was June 28. However, families can still opt out of receiving future monthly payments using the portal.

Changes must be made by Aug. 2 through the portal to apply to the Aug. 13 payment and future payments, according to the IRS. Also, only one bank account number is permitted for each recipient family - meaning the entire payment must be deposited in only one account.


To update bank account information, go directly to the website. The agency advises people to not click on links received by an email, text or phone.

Shelbie Goulding contributed to this story.

Editor's note: Continue to follow The Sumter Item for more coverage of this topic, including explanations about repaying the advance payments.