Parents who are struggling financially were thrilled to receive their first child tax credit payment in July. Getting up to $300-per-child each month (depending on the age of the child) can mean the difference between poverty and survival for some families. Americans had to wait several months for their first payment to arrive, but additional payments are now being sent every month through the end of the year.
SEE MORE 2021 Child Tax Credit Calculator
The IRS sent the second round of child tax credit payments on August 13, and the schedule for future payments is in the table below. At this point, the payments won't continue into 2022, although President Biden and many Congressional Democrats want to extend them beyond this year. So, there's a chance the IRS will still be sending monthly payments next year, too.
Schedule of 2021 Monthly Child Tax Credit Payments
July 15, 2021
August 13, 2021
September 15, 2021
October 15, 2021
November 15, 2021
December 15, 2021
How Much Will Your Child Tax Credit Payment Be Each Month?
The monthly payments are simply an advance of the child tax credit you would otherwise claim on your 2021 tax return. In most cases, if you receive all six payments this year (i.e., from July to December), the combined total of all your payments will equal 50% of the credit you're expected to qualify for on your 2021 return. You'll then claim the other half when your file your tax return next year. (Note that the monthly child tax credit payment amounts don't include the $500 credit available for older children, elderly parents, and other dependents.)
For 2021 only, the child tax credit amount is increased from $2,000 for each child age 16 or younger to $3,600 per child for kids who are 5 years old or younger and $3,000 per child for kids 6 to 17 years of age. If you received your first payment in July, that means the maximum monthly payment for each child under age 6 is $300 and for each child age 6 to 17 is $250. Note that families with higher incomes won't receive that much or could be denied the credit altogether, but most eligible parents will see a considerable bump in their child tax credit for the 2021 tax year. (Use our 2021 Child Tax Credit Calculator to see how much you should receive each month if you're first payment arrived in July.)
Families who didn't get a July payment and are getting their first monthly payment in August will still receive 50% of their total credit for the year. As a result, the total payment will be spread over five months, rather than six, making each monthly payment larger. For these families, the maximum monthly payment is $360-per-child for kids under age 6 and $300-per-child for kids ages 6 through 17.
Are Child Tax Credit Payments Taxable?
If you're receiving monthly child tax credit payments, the IRS isn't going to tax that money when you file your tax return next year. The payments are simply an advance of the child tax credit that you would otherwise claim on your 2021 return – they aren't "taxable income."
They still can affect next year's tax bill or tax refund, though. Since they represent advance payments of the child tax credit, they'll be subtracted from the credit amount you would otherwise be allowed to claim on your 2021 return. That will make your 2021 child tax credit smaller, which means either your tax bill will be higher or your tax refund will be smaller.
Opting Out of Monthly Child Tax Credit Payments
Why might someone want to opt-out of monthly payments? For example, to boost your tax refund, you may want to claim a larger child tax credit when you file your 2021 tax return next year. It also might be smart to opt-out if you no longer qualify for the child tax credit. This could happen if your 2021 income is too high, someone else (e.g., an ex-spouse) will claim your child as a dependent in 2021, or you live outside the U.S. for more than half of 2021. Otherwise, you might have to pay back some or all the money you received as monthly payments this year.
See How and When to Opt-Out of Monthly Child Tax Credit Payments for more information.
Payment by Direct Deposit, Check or Debit Card?
Most families will get their monthly child tax credit payments deposited directly into their bank account. That's how you'll get paid if the IRS has bank account information from:
Your 2019 or 2020 tax return;
The IRS's online tool used in 2020 by people who aren't required to file a tax return to get a first-round stimulus check; or
A federal agency that provides you benefits, such as the Social Security Administration, Department of Veterans Affairs, or the Railroad Retirement Board.
If the IRS doesn't have your bank account information, it will send you a paper check or debit card by mail.
You can use the IRS's Child Tax Credit Update Portal to change the bank account information the IRS has on file. It's too late to make bank information changes for the August 13 payment (the deadline was August 2), but you can make changes for the September payment by August 30. The online tool will tell you if you're scheduled to receive monthly payments by direct deposit. If so, it will list the bank routing number and the last four digits of your account number. If you don't change it, this is the account that will receive all future monthly payments.
If you do want to change the bank account, you can do so by updating the bank routing number and your account number and indicating whether it's a savings or checking account. Note that monthly payments can't be split between multiple accounts – the entire payment must go into one bank account.
Families who are currently scheduled to receive payments by mail can also sign up for direct deposit using the Child Tax Credit Update Portal to add their bank account information (again, it's too late to do this for the August 13 payment). Just enter your bank routing number and account number and indicate whether it's for a savings or checking account. You'll get paid much faster if you switch to direct deposit, plus you won't have to worry about a paper check or debit card getting lost or stolen.
More Information on the 2021 Child Tax Credit
In addition to increasing the credit amount and authoring monthly advance payments, Congress made other changes to the 2021 child tax credit, too. For example, the age for an eligible child was raised to 17, the credit is fully refundable, and the $2,500 earnings floor was removed. An additional layer of phase-outs was also introduced to prevent wealthier families from claiming a larger credit.
Right now, these enhancements only apply to the 2021 tax year. But, as mentioned earlier, President Biden and others want to extend most of them through 2025. (The credit would be fully refundable on a permanent basis under the president's plan.) Whether that happens remains to be seen, but it's certainly possible while Democrats control both houses of Congress and the White House.
We'll continue to cover any further child tax credit developments, but in the meantime you can get up-to-speed on all the changes for this year's credit at Child Tax Credit 2021: How Much Will I Get? When Will Monthly Payments Arrive? And Other FAQs.