Families can now update direct deposit information for Child Tax Credit payments
Families can now provide or update their direct deposit information for monthly child tax credit (CTC) payments through the updated Internal Revenue Service online portal.
"The IRS urges every family who receives checks to consider switching to direct deposit," the agency said in a press release on Wednesday. "With the direct deposit, families can access their money faster."
Monthly payments - made possible by the $ 1.9 trillion American Rescue Plan, which also increased the CTC amount - will begin on July 15. However, this initial payment will reflect the direct deposit information that the agency currently has on file.
Updates made before August 2nd will apply to the second payment sent on August 13th, while any subsequent updates will be reflected in the remainder of the payments. Those who do not have bank details on file will receive a check until the payment details are updated.
If authorized, the tool shows users whether they are registered to receive payments by direct transfer. If you want to update or add direct deposit information, you will need to provide a routing code and account number and indicate whether it is a savings or checking account. One account number is permitted for each recipient.
The maximum balance in 2021 is $ 3,600 for children under 6 and $ 3,000 for children 6-17 years of age. The six monthly prepayments are dispatched on July 15th, August 13th, September 15th, October 15th, November 15th and December 15th.
Here's what else you need to know about monthly payments.
Photo: Getty Creative
How much will my payment be?
Eligible households will receive half of their total payments in advance over the next six months, starting in July and ending in December. Monthly payments are $ 250 for older children and $ 300 for children under 6 years of age.
The amount will be determined in the 2020 tax return. If this return is not available, the IRS will use your 2019 return.
A submitter with children under 17 who earn up to $ 75,000 will receive full payment for each child, while those who earn up to $ 90,000 will receive a reduced amount. Joint applicants with children up to $ 150,000 receive full credit for their child, while those earning up to $ 170,000 receive a lesser amount.
Single filers earning more than $ 200,000 and joint applicants earning more than $ 400,000 are eligible for the old loan, which is $ 2,000 per child under the age of 17.
U.S. President Joe Biden signs the American Rescue Plan, a package of economic relief efforts to respond to the effects of the coronavirus disease (COVID-19) pandemic, in the Oval Office of the White House in Washington, USA, on March 11, 2021 . REUTERS / Tom Brenner
Who is Eligible?
The IRS will use your federal tax return and 2020 income to determine if you are eligible for credit. The prepayments are equal to half of the total credit of an eligible household, while the remaining half of the credit can be claimed on your 2021 tax return.
The payments would be made to eligible taxpayers who have had a primary residence in the United States for more than half a year.
The CTC has also been made fully refundable, which allows taxpayers to receive the credit as a refund even if it is worth more than they owe in taxes.
Households with about 65 million children - or 88% of US children - will be eligible, the Treasury Department said in May. Payments are made by direct debit, check or debit card.
House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Chuck Schumer demonstrate the "American rescue plan" during the enrollment ceremony following the passage of the $ 1.9 trillion Coronavirus Disease Act (COVID-19) by US President Joe Biden on Capitol Hill in Washington. USA, March 10, 2021. REUTERS / Erin Scott
What do I have to do to get the loan?
Most taxpayers should not take any action other than filing their 2020 tax return to apply for the credit if they have not already done so.
Read more: Taxes 2021: Credit, deductions and tax relief for student loans and tuition fees
Additionally, eligible taxpayers who do not wish to receive advance payments for 2021 can opt out of receiving the monthly payments, but the IRS has yet to detail how to do so.
Can the loan become permanent?
As part of his American family plan, President Joe Biden suggests extending the CTC's expansion until 2025. He has previously said that the government is keen to make the performance permanent.
Some legislators also advocate permanent expansion of the CTC and the expanded Earned Income Tax Credit (EITC).
"We must not allow these critical extensions to expire after a year," wrote 40 Democratic senators in a letter in March. "This would lead to a significant rise in child poverty after we take historic steps to end it. It would mean millions of struggling adult workers being taxed into poverty again."
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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
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