Americans who are due to start receiving "family stimulus checks" in about a week and a half now have a way to easily enroll for the payments and make sure the money drops directly into their bank accounts.
Under a temporary expansion of the child tax credit — part of the massive COVID stimulus bill President Joe Biden in March — 39 million middle- and lower-income households can receive monthly checks for up to $300 per child throughout the second half of this year. The first payments will be made on July 15.
The money could help parents buy food, diapers and other necessities, pay down debt or build up savings for emergencies.
The IRS recently rolled out a tool to make claiming the cash easier, and it has now given households a quick way to steer the money into a savings or checking account.
IRS child credit 'update portal' now has bank account feature
The tax agency recently launched its "child tax credit update portal" that allows U.S. households to determine their eligibility for the enhanced child credit, and manage and monitor their monthly payments.
Biden's pandemic relief package has beefed up the credit for 2021 to include six months of direct payments to families with kids: $250 a month for each child ages 6 through 17, and as much as $300 monthly for children under 6.
Couples qualify if they earn $150,000 or less and have children 17 and under. The same goes for single parents who make no more than $75,000. If you're eligible and you filed your taxes this year, the IRS should have the information it needs to send your money
A new feature added to the portal last week makes it simple for families to see that the cash goes to the right place. You can not only check your eligibility but also review the banking details the tax agency has on file for you — and make any necessary changes.
"The IRS encourages people without current bank account information to use the tool to update their information so they can get the payments sooner," the agency said in a statement last Wednesday.
How to change your family information using the portal
Once you register on the site and verify your identity, you're good to start taking advantage of the portal. You'll want to begin by making certain you're all set to get your money.
“IRS employees continue to work hard to help people receive this important credit,” IRS Commissioner Chuck Rettig says in a statement, while adding that the update tool will help families understand, sign up for and monitor their payments.
If you discover you're not enrolled for direct deposit but are in line to get paper checks, you can switch that by adding your bank routing and account numbers. That way, you'll receive and have access to the cash more quickly, starting with the second payment on Aug. 13.
Rettig's agency says more options will be added to the portal later this summer and in the fall, to allow users to view their payment histories and update the IRS on any developments it needs to know about.
That means if you move or welcome a new baby this year, you’ll be able to easily make changes to your account from your smartphone or computer.
Why you might want to opt out of the payments
The monthly checks represent half the money families can receive from the expanded child tax credit for 2021. The other half will come in the form of tax refunds.
Let's say you have one child who's 4 years old, and you meet the child credit income requirements. You'll get six months of $300 checks this year, totaling $1,800. When you file your 2021 taxes next year, you'll claim another $1,800 — for a total child tax credit of $3,600. In ordinary years, the credit tops out at $2,000.
The monthly payments can be used for anything: bills, a family splurge, or even as an opportunity to teach your kids about money. But if you don’t need the money urgently, it might be better to take the full credit as a lump sum next spring. In our example, you'd collect up to $3,600 via a tax refund.
If you decide you'd rather hold off on receiving your child credit money, you can just unenroll from the monthly checks by using the update portal.
What to do if you won't get the money
If your household needs relief but you're not likely to qualify for the family stimulus checks, you have a few options to find some savings in your budget right now.
Bundle your debt. If you’ve been relying on your credit cards to carry you through the pandemic, consider rolling those high-cost balances into a lower-interest debt consolidation loan. You'll save hundreds on the interest and pay off the debt faster.
Become your own insurance adjustor. You might easily be overpaying for your car insurance by hundreds every month. If it’s been a while since you comparison shopped for your coverage, it’s time to look around for a better price. You also can save on homeowners insurance by comparing rates to find a less expensive policy.
Refinance your mortgage and slash your payments. Mortgage rates are still at some of the cheapest levels in history. Refinancing your current home loan could save you thousands of dollars through the rest of this year. With the average rate on a 30-year home loan still hovering around 3%, the mortgage tech and data provider Black Knight recently said 14 million homeowners could refi and cut their monthly payments by an average $287.
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