Starting July 15, eligible Americans will begin to receive cash from the federal government, with absolutely no spending restrictions. No, this is not another stimulus check. It is actually the start of advance payments being made under the expanded Child Tax Credit (CTC).
How much will you receive?
Eligible families will receive $250 for each child between the ages of 6 and 17 between July and December. Families with children under 6 years will receive $300 per kid. The credit, however, is not something new – families have been receiving this payment as a lump sum at tax time for over two decades. But earlier this year, Congress approved a one-time boost to the payable amount, enabled payments in advance monthly installments, and broadened eligibility.
Some families may have to repay part of their CTC payment
If a family receives more than they are owed in child tax credit payments, they may need to repay the money to the IRS. The IRS is deciding the CTC payment amounts based on the 2019 and 2020 tax return data. So, if someone in a household takes up a better-paying job or receives a substantial raise, that could push them above the income eligibility. The same applies to parents who split custody of their children.
In this case, if the IRS overpays a family, it may need the money back during the next (2022) tax season. The IRS has announced that excess payments will be deducted from tax refunds, but that it was open to working out installment plans with people who did not have the necessary funds to pay the due amount.