Frequently Asked Questions on the Advance Child Tax Credit (American Rescue Plan Act (ARPA) of 2021 that expands on the Child Tax Credit (CTC)
Below are questions and answers on the U.S. government’s Child Tax Credit program and how it will operate in 2021 to provide eligible parents with tax credit payments beginning in mid-July 2021.
What is the Child Tax Credit (CTC)?
The child tax credit is a federal tax benefit available to American taxpayers that reduces taxes for each qualifying dependent child.The purpose of the tax credit is to help taxpayers support their families by giving them money back from the government, and this tax credit was significantly expanded by recent U.S. government legislation, the new law American Rescue Plan Act of 2021 (ARPA), which became effective on March 11, 2021.
How has the Child Tax Credit (CTC) changed this year and how does it help me?
There have been important changes to the CTC that will help many families receive advance payments from the government starting July 15, 2021; the payments could be larger, and the credit is now refundable. The American Rescue Plan Act (ARPA) of 2021 expands the CTC for the tax year 2021 only.
The expanded credit means:
- The credit amounts—the money they will get back from the government—will increase for many taxpayers.
- The credit for qualifying children is fully refundable, which means that taxpayers can benefit from the credit even if they don't have earned income or don't owe any income taxes.
- The credit will include children who turn age 17 in 2021.
- Taxpayers may receive part of their credit in 2021 before filing their 2021 tax return in 2022.
- The 2021 child tax credit will be distributed to eligible taxpayers in advance monthly payments starting on July 15, 2021.
How does the expanded Child Tax Credit work and how can I determine if I qualify?
For tax year 2021, families claiming the CTC will receive up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021. They will receive $3,600 per qualifying child under age 6 at the end of 2021. Under the prior law, the amount of the CTC was up to $2,000 per qualifying child under the age of 17 at the end of the year.
The increased amounts are reduced (phased out), for incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.
For most people, modified Adjusted Gross Income (AGI) is the amount shown on Line 11 of their Internal Revenue Service (IRS) federal tax 2020 Form 1040 or IRS Form 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit—either $1,000 or $1,600 per child—is reduced by $50 for every extra $1,000 in modified AGI.
In addition, the entire credit is fully refundable for 2021. This means that eligible families can get it, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.
Will the IRS tell me if I qualify for a CTC?
Yes, approximately 36 million American families will be receiving a letter from the Internal Revenue Service, and, based on tax returns filed with the IRS, they may be eligible to receive a CTC beginning in July. The letters are going to families who may be eligible based on information they included in either their 2019 or 2020 federal income tax return or who used the on IRS.gov last year to register for an Economic Impact Payment.
Families who are eligible for advance CTC payments will receive a second, personalized letter from the IRS listing an estimate of their monthly payment, which begins July 15, 2021.
What else is different in the Child Tax Credit for 2021?
There are several important changes to the CTC this year. The amount that can be claimed per qualifying child is going up from 2020. Eligible taxpayers can receive between $3,000 and $3,600, depending on their qualifying child's age. In addition, the advance payments of the 2021 CTC will be made regularly from July 15th, 2021 through December 15th, 2021 to eligible taxpayers who have a main home in the United States for more than half the year.
The total of the advance payments will be up to 50% of the CTC payments estimated from information included in eligible taxpayers' 2020 tax returns (or their 2019 returns if the 2020 returns are not filed and processed yet).
The IRS urges people with children to file their 2020 tax returns as soon as possible to make sure they're eligible for the appropriate amount of the CTC as well as any other tax credits they're eligible for, including the Earned Income Tax Credit (EITC). Filing electronically with direct deposit also can speed refunds and future advance CTC payments.
What do I need to do if I want to receive these CTC payments starting July 15, 2021?
Eligible taxpayers do not need to take any action now other than to file their 2020 tax return if they have not done so.
This is an opt-out process, meaning most eligible taxpayers are likely going to automatically receive these payments up front between July and December 2021. They may want to check the IRS portals when they open up on or after July 1, to make sure their information is updated and listed correctly.
What if I'm eligible, but do not want to receive the CTC?
Eligible taxpayers who do not want to receive advance payment of the 2021 CTC will have the opportunity to decline receiving advance payments. Taxpayers will also have the opportunity to update information about changes in their income, filing status or the number of qualifying children. More details on how to take these steps will be announced soon.
The IRS also urges community groups, non-profits, associations, education groups and anyone else with connections to people with children to share this critical information about the CTC. The IRS will be providing additional materials and information that can be easily shared by social media, email and other methods.
The IRS will provide more information about advance payments soon. For now, you can access this link for more information: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.
When will the advance CTC payments begin in 2021?
For eligible taxpayers who qualify, the American Rescue Plan's expanded CTC will start paying out beginning July 15, 2021. Eligible households will begin to receive monthly checks totaling up to $3,600 per dependent. Depending on your family's eligibility, you could receive a $250 or $300 check for each dependent every month until the end of the year, with another lump sum in 2022.
Please note that for the August CTC payment(s), ACH funds will be made available on Friday, August 13 as August 15 falls on a Sunday, which is not a banking day. Delta Community cannot make ACH payments available for use on a weekend or holiday because the settlement date selected by the sending party (government, employer, pension fund, or other payer) occurs on a day when the Federal Reserve Bank is closed, which delays settlement until the Federal Reserve Bank's next business day. Delta Community has no control over the settlement date that is stipulated by the federal government.
Families for which the IRS does not have bank account information could receive paper checks or debit cards in the mail. The schedule appears below:
| Monthly | Maximum Payment per Child; 0 to 5 | Maximum Payment per Child; 6 to 17 |
|---|
| July 15: First 2021 check | $300 | $250 |
-
Monthly:
-
July 15
-
Pmt. per child 0-5:
-
$300
-
Pmt. per child 6-17:
-
$250
|
| Aug. 13 | $300 | $250 |
-
Monthly:
-
Aug. 13
-
Pmt. per child 0-5:
-
$300
-
Pmt. per child 6-17:
-
$250
|
| Sept. 15 | $300 | $250 |
-
Monthly:
-
Sept. 15
-
Pmt. per child 0-5:
-
$300
-
Pmt. per child 6-17:
-
$250
|
| Oct. 15 | $300 | $250 |
-
Monthly:
-
Oct. 15
-
Pmt. per child 0-5:
-
$300
-
Pmt. per child 6-17:
-
$250
|
| Nov. 15 | $300 | $250 |
-
Monthly:
-
Nov. 15
-
Pmt. per child 0-5:
-
$300
-
Pmt. per child 6-17:
-
$250
|
| Dec. 15: Last 2021 check | $300 | $250 |
-
Monthly:
-
Dec. 15
-
Pmt. per child 0-5:
-
$300
-
Pmt. per child 6-17:
-
$250
|
| April 2022: Second half of payment | $1,800 | $1,500 |
-
Monthly:
-
April 2022
-
Pmt. per child 0-5:
-
$1,800
-
Pmt. per child 6-17:
-
$1,500
|
How can I access the IRS portals?
Before July 1, the IRS will open two web portals to allow you to choose if you want to defer receiving half the total through advance monthly checks, which would mean getting one payment in 2022 for the full amount instead. The portals will also allow you to update your personal details if your income or number of dependents has changed, which are essential details needed for receiving the right amount for the credit. You can visit the IRS' website here for more information: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.
In the next few weeks, the IRS website page will also feature other useful new online tools, including:
- An interactive Child Tax Credit eligibility tool to help families determine whether they qualify for the Advance Child Tax Credit payments.
- Another tool, the Child Tax Credit Update Portal, will initially enable anyone who has been determined to be eligible for advance payments unenroll/ to opt out of the advance payment program. Later this year, it will allow people to check on the status of their payments, make updates to their information, and be available in Spanish. More details will be available soon about the online Child Tax Credit Update Portal.
Is there anything I can do that will help me get my tax credit payment(s) faster?
Please note that Delta Community cannot do anything to speed up U.S. government payments; it receives money when it is provided by the federal government.
The most important thing members can do to assist with getting their stimulus payment as quickly as possible is to ensure their savings/member account and checking account numbers provided for direct deposit are correct with other financial institutions and with the IRS. Members are responsible for providing their correct Delta Community account numbers to other organizations where they have accounts or relationships, including to the IRS.
The single biggest difficulty that Delta Community encounters that delays deposits is regularly having to go into our systems and manually correct members' checking or savings/member account numbers that have been provided for direct deposit. If we receive thousands of payments with incorrect account numbers, it will take several days to manually correct each one. If an account number must be manually corrected then it will not show up in an account as a pending deposit.
For members, your savings account number—and only your savings account number—is also your member number; Delta Community savings account numbers and member numbers are always the same. Your checking account number is distinct and not derived from your member number in any way.
To make sure you are providing the correct account number for direct deposits, log in to Online Banking and review the My Accounts section:
- Select the account you want to review.
- Click the arrow next to Account Details.
- You can see the type of account and the MICR number. That MICR number is the account number you need to provide for direct deposit.
- If the account number has a (-), you only need to provide the account numbers before the dash; the four numbers after the dash are not needed.
If you do not have Online Banking and are unsure of your savings/checking account number, please contact our Member Care Center via our toll-free number at 800-544-3328 or locally at 404-715-4725 for assistance.
