Here's What You Need to Remember: The start of the advance payments for the child tax credit comes as the IRS appears set to wind down its distribution of stimulus payments, and as more and more people advocate for an additional round of stimulus payments

The IRS announced recently that qualifying American families would receive their first monthly payments as part of the expanded child tax credit starting on July 15. According to the IRS, roughly 39 million households – covering 88 percent of children in the United States – will receive payments. These payments will be distributed automatically to all eligible households with no further action required on the part of potential recipients, and will be done so based on information contained in 2020 tax returns (or 2019 tax returns if a household or individual has not yet filed their 2020 tax return).

The expanded child tax credit included in the American Rescue Plan has resulted in a number of significant changes to the child tax credit, including both eligibility criteria and factors that will determine how large of a credit American families can expect to receive.

This includes increasing the size and scope of the credit. Currently, families can claim a credit of up to $2,000 for children under the age of six, but under the expanded credit this has been increased to $3,600 for children under six and $3,000 for children up to 17. The expanded credit also sees the credit become fully refundable.

Income requirements for the credit do exist, with individuals who earn up to $75,000 eligible for the credit, along with heads of households and married couples filing jointly who earn up to $112,500 and $150,000, respectively. The credit then phases out for higher earners. A bill recently introduced by Democrats in the House of Representatives would see the income threshold raised to $150,000 for both heads of households and married couples filing jointly.

The credit will manifest itself as both an advanced payment in the form of regular monthly payment and an additional lump sum during next year’s tax season. The regular monthly payments will be $300 per child under the age of six and $250 per child up to the age of 17. Currently, the child tax credit is paid out only as a single lump sum during tax season.

Important to note is the fact that if the information upon which the IRS is determining an individual or household’s eligibility for the expanded child tax credit is outdated or in any way incorrect, recipients will be required to pay back any excess amount sent to them.

Those who correctly filed their 2020 tax returns will likely not have to worry, but the IRS has also announced that it will be launching two online portals starting July 1 that will allow people to both register for the payments if they don’t normally file tax returns, and to update any relevant information such as income changes, child custody status, and if they have had any additional children.

The start of the advance payments for the child tax credit comes as the IRS appears set to wind down its distribution of stimulus payments, and as more and more people advocate for an additional round of stimulus payments.

Eli Fuhrman is a contributing writer for The National Interest. This article is being republished due to reader interest.

Image: Reuters.