Around 35 million American families have already received their first advanced child tax credit payment.
Beginning on July 15, the advanced payments began. The checks will continue to be disbursed every month until the end of the year totaling half of all the child tax credit a family will receive.
As part of the American Rescue Plan, the child tax credit was expanded from $2,000 to $3,600 for qualifying children 5 and under and $3,000 for children 6-17.
Extending the credit: Biden administration wants to permanently extend Child Tax Credit expansion past 2021
What to know about the payments: Monthly child tax credit payments started. Here's what to know
What should I do if I haven't gotten my payment yet?
There are a few steps you can take if you are still waiting on your payment, one of them is using the child tax credit update portal where you can check if you’re enrolled to get advanced payments, unenroll from receiving advanced payments and provide or update your bank account information.
The tool can also tell you how your payment has been sent if it is already processed, either through direct deposit or mail.
How can the advanced payments influence my taxes next year?
While the advanced payments have helped a lot of families navigate financial hardships, there are some considerations filers should take while deciding if they want to continue receiving advanced payments.
Because the IRS is basing the advanced payments on 2020 – or sometimes 2019 – tax returns, if your income has significantly changed, then you might end up owing the IRS money.
When filing 2021 taxes, you will need to compare the full amount of advanced child tax credit payments you got through 2021 with the amount of child tax credit you can claim based on your 2021 tax returns.
If the total dollar amount that you can claim according to your 2021 tax returns is greater than the total of your advanced child tax credit payments, you can claim that remaining amount on your 2021 tax returns.
But if the amount from the advanced payments is greater than what you can claim according to your 2021 tax returns, then you may need to repay the IRS some or all of the excess payment.
An excess can be paid through a reduction in the federal income tax refund but if there's still a balance to be owed it will be treated like other tax balances, according to the IRS.
If your income is below $40,000 as a single filer or $60,000 for couples filing jointly, you won’t have to pay that excess amount.
The IRS will also send a letter to families in January 2022 detailing the total amount of advanced child tax credit payments awarded in advanced payments, which can be used while filing your 2021 tax returns.
Will I owe taxes on the child tax credit?
You can use the child tax credit update portal to update your income, number of qualifying children, and filing status throughout 2021. This can help lead the IRS to a more accurate estimate of how much you should receive in advanced payments.
Or you can unenroll from receiving the advanced payments and claim the full amount of your child tax credit after filing your 2021 returns.
The IRS has deadlines for unenrolling before each payment, and if married and filing jointly each individual must unenroll.
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How can my income affect the payments?
The child tax credit can be reduced in two stages, the first stage can reduce the child tax credit to $2,000, which applies to the expansion given this year.
The second stage, when requesting the credit when filing your 2021 taxes, can reduce the child tax credit below the $2,000, the permanent credit.
The first stage will begin to reduce your child tax credit to $2,000 if your adjusted gross income in 2021 is greater than $150,000 for most couples filing jointly, $112,500 if you are filing as head of household, or $75,000 for most single filers.
In the second stage, the child tax credit can be reduced below $2,000 if your adjusted gross income exceeds $400,000 for couples filing jointly and $200,000 for all other filers.
There is a $50 reduction for each $1,000 dollars that your adjusted gross income exceeds the set threshold.
This article originally appeared on USA TODAY: Status of child tax credit: Where is it, do you want it?