What the new child tax credit means for families

Letters from the IRS have been going out to Central Florida families over the last week explaining the new child tax credit and the expected monthly payments.

In March President Joe Biden signed the American Rescue Plan which added an extra $1,000 to the child tax credit, also allowed half of credit to be paid in advance over six months from July through December.

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Under the plan parents of children the age of six will receive $300 a month, while parents of children age 6 to 17 will receive $250 a month. Currently, the default option is to receive monthly payments, however, the IRS will be launching an opt-out feature to allow families to forgo the monthly payments and instead get the full tax credit when they file their taxes next year. The full credit is available for parents who file as single taxpayers and make less than $75,000 a year , $112,500 dollars who file as head of household or $150,000 for married couples filing jointly.

“What this represents is half of your child tax credit,” says Adam Markowitz, the Vice President of Markowitz Accounting. “We still have not received a ton of guidance from the IRS, the IRS still has to finish building out this opt-out portal because many people may want to get the entire credit on their taxes next year if they think they may make more money in 2021 than they did in 2020.”

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While the IRS is still working on the opt-out feature, it has already launched a link for low-income families for tax credit even if they did not file taxes for 2020.

Letters sent to families who may qualify for monthly Child Tax Credit payments (NCD)

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