Expanded Child Tax Credit provides financial relief for millions of families

The American Rescue Plan, proposed by President Biden and passed by Congress this March, included a historic increase in the federal Child Tax Credit that is projected to reduce the child poverty rate in America by as much as 50 percent.

The expanded Child Tax Credit will provide crucial financial support for low- and middle-income families, especially those struggling financially due to the COVID-19 health crisis. With roughly 12.5 million children in the U.S. living in poverty, it is vital that families in Arizona and across the country are aware of the expanded credit and know how to enroll if not enrolled already.

What’s changed?

Formerly a one-time credit of $2,000 per child, the Child Tax Credit has been increased to $3,600 per year per child under age 6 and $3,000 per year per child between ages 6 and 17. Under this revised credit, the IRS will pay half the total credit amount in advance monthly payments beginning July 15 through the end of 2021 ($300 per month for children under age 6 and $250 for children ages 6 to 17. The other half of the credit will be claimed when families file their 2021 federal taxes. Families who would prefer to receive the credit as a lump sum during tax season can do so by updating that preference on the IRS website.

Who is eligible?

Families filing taxes jointly and making up to $150,000, head of household filers making up to $112,500 and single parents earning up to $75,000 per year are eligible for the full value of the new child tax credit. Children of eligible families must have a Social Security number (SSN), but parents can have either an individual taxpayer identification number (ITIN) or an SSN.

How do I get it?

Eligible families – including families that do not owe taxes – will need to have filed their 2019 or 2020 taxes in order to automatically begin receiving payments. Similarly, if you did not file taxes in 2019 or 2020, but signed up to receive a prior Economic Impact Payment or signed up using the IRS’s Child Tax Credit Non-Filer Sign-up Tool, your payments will also begin automatically.

For families who did not have to file taxes in 2019 or 2020, and did not register for Economic Impact Payments, you will need to sign up for the Child Tax Credit advance payments using the Non-Filer Sign Up Tool.

Looking for help or more information?

Need help filing your taxes? If you live in the City of Phoenix and your household income was $57,000 or less in 2020, you may be eligible for the Volunteer Income Tax Assistance (VITA) program, which offers free tax filing assistance. If you live outside the City of Phoenix, click here to find another VITA location. The Arizona Department of Revenue offers several free options for filing your Arizona income taxes. 

More information about the expanded Child Tax Credit can be found at WhiteHouse.gov or from our friends at Common Sense Media.