If you have children, and normally claim the federal Child Tax Credit on your taxes, you should have noticed an extra $300 for each child under 6, and $250 for each child 6-17, in your bank account last month.
Part of the American Rescue Plan Act signed into law in March of this year, the advances on the child tax credit are designed to help struggling families now, instead of making them wait until they file their taxes next year to gain the benefit of the credit. Also, the new law expands the amount you will receive for the tax credit: the normal $2000 credit is increased to $3600 for children under 6, and $3000 for children 6-17.
While I know many people really need the extra money now, keep in mind that since this is a tax credit you would normally claim on your federal tax return, if you’re taking the money now, you may not be able to claim it next year against taxes you may owe. The law provides that if your adjusted gross income for a single filer is less than $40,000-or $60,000 for joint filers-then you won’t have to repay/not claim the credit next year. What that means is that if you normally rely on the child tax credit to keep you from having to pay taxes-and your income is above these limits-then you will be able to use it next year on your 2021 federal taxes since you will already have received it.
You can read more about it on the IRS website here.
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