When you'll get your cash
Around 39 million U.S. households — with 88% of the nation's kids — qualify for the payments "without any further action required," the IRS and the Treasury said in a joint statement on Monday.
Things are set to begin on time. Biden's COVID relief law calls for the tax agency to distribute the monthly payments to eligible familes starting in July — and the first checks will indeed be paid in July, on the 15th, the statement says. Then, payments will go out on the 15th of every month, unless it falls on a weekend or holiday.
If yours is a household headed by a couple earning less than $150,000 or an individual making under $75,000, you're slated to get six months of $250 payments for each of your kids ages 6 to 17, through December. For any child under 6, you’ll be given $300.
In total, you’ll receive a credit of either $3,000 or $3,600 for every one of your children for this year, depending on their ages. The monthly payments will account for half the credit, and the other half will be refunded next year when you file your taxes for 2021.
In previous years, you could claim a credit of only as much as $2,000 per child. Under the expansion of the credit, single parents earning more than $75,000 and couples with incomes over $150,000 won’t receive the full payments but may still qualify for some support.
How it works, including if you welcome a 'new addition'
This temporary change to the credit provides families with up to $1,600 more per child that can be used however you like: for family expenses, debt, savings or even investing.
One popular investing account you could open for your kids would allow them to grow their savings merely by adding "spare change."
Here's an example of how the math on the credit works: Let’s say you have a 3-year-old and 6-year-old. You can expect to receive $550 every month from July through December; if you claimed the child credit for the kids last year, they’ll be accounted for on your tax return, and you should be set to receive payments.
But what if you welcome a baby into the family this year? Can you get checks for the new addition?
Tucked into the relief bill is a request for the IRS to set up a new online portal where families can update their information, including the number of qualifying children.
The hope is that the portal will be up and running by July — so you'll be able to go online and enter the information about that joyful reason for all the sleepless nights you're now having.
What if you can't wait and need money now?
If you don’t qualify for the enhanced credit, or you can’t wait two months for the extra relief, here are some options to find more cash right away:
Cut the cost of your debt. If you’ve been relying on credit cards throughout the pandemic, expensive interest will catch up with you before long. A lower-interest debt consolidation loan can fold your balances into a single, more affordable payment — and help you find freedom from your debt sooner.
Become your own insurance adjustor. You may be overpaying for insurance by hundreds every month. With everyone staying home during the pandemic and driving much less, some car insurance companies have been giving customers price breaks. Not yours? Shop around for a better deal. You also can save on homeowners insurance by comparing rates to find a less expensive policy.
Refinance your mortgage and slash your payments. Though mortgage rates have risen off their recent all-time lows, they're still at some of the cheapest levels in history. Refinancing your current home loan could save you thousands of dollars through the rest of this year. With the average rate on a 30-year home loan back under 3%, the mortgage tech and data provider Black Knight says 13 million homeowners could refi and cut their monthly payments by an average $283.