Child Tax Credit Payments Starting July 15
For families, July may be the start of extra funds from the government. Parents anxiously awaiting the July 15 start of the monthly child tax credit payments should start planning how they’ll use the extra money now.
How much could the credit be
Changes to the Child Tax Credit will help many families get advance payments starting this summer. The monthly payments could be as much as $300 per month for children under the age of 6, and $250 per month for those between the ages of 6 and 17 for those families eligible for the full credit.
For tax year 2021, the Child Tax Credit is increased from $2,000 per child to:
- $3,600 for children ages 5 and under at the end of 2021; and
- $3,000 for children ages 6 through 17 at the end of 2021.
The IRS will pay half the total credit amount in advance monthly payments beginning July 15 through December. Families will claim the other half when you file your 2021 income tax return in 2022. These changes apply to tax year 2021 only.
To qualify for advance Child Tax Credit payments, you — and your spouse, if you filed a joint return — must have:
- Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return or provided the IRS with your information to receive previous stimulus payments; and
- Have a child who is under age 18 at the end of 2021 with a valid Social Security number; and
- Made less than certain income limits. The full expanded benefit is available to all children age 17 and under in families with 2020 adjusted gross income of less than $75,000 for single parents and $150,000 for a married couple filing jointly, and ends for individuals earning $95,000 and married couples filing jointly making $170,000 (though they’d still be eligible for the regular child tax credit.)
The IRS uses your previously submitted information to determine if you qualify and automatically enrolls you for advance payments.
How will families get the credit
For about 80% of families, the money will be direct deposited into the same account they told the IRS to use for their 2020 tax refund. MMFCU’s Online Banking or Mobile App allows you to monitor when the payment is received each month, you can also easily transfer it to another account. Others who didn’t select direct deposit when they filed 2020 taxes will receive either a paper check or a debit card, according to the IRS.
Families who still haven’t filed 2020 tax returns but would be eligible for the credit should make sure they submit their tax information to the IRS.gov website, even though it’s after the official deadline. Doing so ensures that the IRS has the most up to date information about your family and where to send any benefit owed.
Timing of payments
One important thing for families to remember is that the enhanced child tax credit and monthly payments will start in July and go to December 2021. After that, the remaining credit will be claimed when filing a 2021 tax return and come in a lump sum with the rest of what the family is owed from the IRS.
Online and Mobile Banking Notifications:
Use the notification settings to get an alert when the account receives an automated deposit:
- Log in to Online Banking
- Go to Settings (upper right corner)
- Notifications Tab
- My Accounts section, Automatic Deposit Alert
- Click the gear icon on the left and choose your account and email or text alert
- Use the Managing your Debit Card & Credit Card tool to receive deposit alerts:
- Register your Debit Card by clicking on the blue Register/Manage button
- Enter your Debit Card Number
- Review and Accept the Terms and Conditions by checking the box
- Answer the security questions
- Create a new registration or click previous registration listed
- Choose email or mobile phone number to receive alerts
- Click on Add New Alert
- Select Deposit which will provide an alert when a deposit posts to the account you configured
- Then click Add Alert
- You will receive an email or text message to alert you to a deposit to your account
Plan now for monthly payments
Thinking ahead about how to use the extra money each month can help families make the most of the cash. Like any tax refund, there are no limits on how families can spend the money they receive from the child tax credit, giving a lot of flexibility for people to decide how the extra cash can best help, depending on their situation.
For those who’ve been hit hardest by the pandemic, family needs may change each month: paying for car repairs, childcare, rent, back to school expenses, food and more.
It can also be an opportunity to create a savings account for your child as jump-start for larger expenses as they grow like a car or college. Mid Minnesota Federal Credit Union has different account options to consider:
YES Savings Account pays 3.00%APY up to $500 for youth age 17 and younger. This would be a great way to help them learn how to grow their money!***
WINcentive ® Savings offers the chance to win cash prizes from a state-wide drawing! Prize drawings occur monthly, quarterly and annually. How it works, is the account holder is entered into a drawing for cash prizes each month for every $25 deposit up to $100 (for up to four chances to win each month). Monthly prizes are $50 and $100, quarterly are $100 and $1,000. At the end of the year, you could possibly win $5,000! **
Fast Forward Certificate pays dividends as you build your balance! You can start with as little as $10 and a commitment to deposit at least $10 per month for the remainder of the term.*
Teen Checking Account provides an opportunity for you to help coach your teen on managing money wisely without the hassle of monthly service charges or monthly balance requirements. This checking account is specifically for those ages 13-17 and provides, a Visa Debit Card and the ability to check your accounts and make transfers on your home computer or mobile phone.
MMFCU team members are here to answer your questions and can help set-up an account now or once payments begin to arrive. Request an appointment, call (218) 829-0371 or visit your local MMFCU office.
*Must make minimum $10 monthly contribution to avoid a $10 penalty. **Ask the credit union for complete terms, conditions, and official rules. Prize amounts are estimates and may be changed from time to time. © Copyright Minnesota Credit Union Network, 2019. All rights reserved. ***YES balances up to $500 receive an APY of 3.00%APY and balances over $500 earn 0.05%APY on the portion of balance over $500. APY = Annual Percentage Yield. APY will range .05 – 3.00%APY APY is accurate as of 6/1/2021. Dividends will be credited on the last calendar day of each month to the YES account. No minimum deposit is required to open a YES account. Limit one account per social security number. Certain restrictions apply. Federally insured by NCUA. SOURCES: IRS.gov and CNBC