What they didn't say about the 2021 Child Tax Credit - 8 Facts

Children are expensive to take care of. Studies show that women earn less after they have children despite strong credentials. To provide mothers and parents with financial relief, the federal government created the child tax credit in 1997. It was originally constructed to provide tax relief to middle and upper middle class families. And while it has helped all families since then, it wasn't until the COVID-19 pandemic that the federal government finally decided that it would be useful to focus on relieving the poor too.

Why is this odd?

This is odd because...

In 2017, the birth rate in the United states was the highest amongst families who earned $10,000 or less. Families making $200,000 a year or more aren't having as much children.

This fact indeed shows you that poor families needed help many moons ago.

However on a lighter note, the 2021 Child Tax Credit is very helpful for now. If you aren't aware already, under the plan, low- and middle-income families with children will receive a yearly total of $3,000 per child aged 6 to 17 and $3,600 per child under 6. Before it was only $2,000 per child under age 17.

Looking at the supplemental poverty measure (SPM), this single provision is projected to reduce child poverty from nearly 14 percent to 7 and a half percent—a 45 percent reduction—according to researchers at Columbia University’s Center on Poverty and Social Policy. The payments are projected to drastically cut child poverty across racial groups, but with particularly large reductions for Black, Hispanic, and Native American children. Similar reductions are expected for the number of children living in deep poverty.

Fact #1: The person who claimed the child during tax season will be the one to receive the credit.

Fact #2: You can claim this credit even if you are undocumented, as long as the children are citizens.

Fact#3: You will receive half of the $3,000 ($250 a month) or half of the $3,600 ($300 a month) from July 2021- December 2021. And during tax season you can claim the remaining half on your taxes, which will be $1500 for some, and $1800 for others. This all simply means you're getting the payments sooner rather than waiting to receive that money when you file.

Fact #4: You can opt out here. https://www.irs.gov/credits-deductions/child-tax-credit-update-portal.

Here are the remaining opt-out deadlines:

• Payment Date: August 13 / Opt-Out Deadline: August 2

• Payment Date: September 15 / Opt-Out Deadline: August 30

• Payment Date: October 15 / Opt-Out Deadline: October 4

• Payment Date: November 15 / Opt-Out Deadline: November 1

• Payment Date: December 15 / Opt-Out Deadline: November 29

Fact #5: The IRS has made a one-time payment of $500 for dependents age 18 or full-time college students up through age 24. Parents of a child who ages out of an age bracket are being paid the lesser amount. That means if a five-year-old turns six in 2021, the parents receive a total credit of $250 per month, not $300. Likewise, if a 17-year-old turns 18 in 2021, the parents receive $500 once, not $250 per month.

Fact #6: The advance Child Tax Credit payments are not income and will not be reported as income on your 2021 tax return.

Fact #7: If for whatever reason you wind up getting more child tax credit money than you actually qualify for, you might need to repay some of the money to the IRS next year. I myself weirdly received an extra $242 for July. The IRS will send you a letter in January 2022 that will help you determine if you received an overpayment and if you need to repay all or part of the advance payments.

Fact #8: Federal, state or local agencies can't use this credit as income when determining if you or your family is eligible for other benefits or assistance.

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