The expanded credit is worth up to $3,600 per kid

Little girl with pigtails with pile of coins, writing a note on a table.
People Image Studio / Shutterstock

The beefed-up child tax credit for 2021 was included in the $1.9 trillion COVID rescue bill President Joe Biden signed in March.

It's worth as much as $3,000 for each child ages 6 through 17, and $3,600 for kids under 6. Households are receiving half the credit through the monthly payments — of up to $250 or $300 — during the second half of this year, and they can collect the rest through tax refunds when they file their 2021 returns next year.

Families can spend the cash however they like, whether to pay for essentials like food and diapers, cover routine bills, or deal with debt.

The credit begins to phase out for households headed by couples earning $150,000 or more, and individuals making $75,000 or above. And, it completely cuts off at incomes of $170,000 for couples filing jointly, and $95,000 for single earners.

But many lower-income households may also be shut out.

Why the cash is missing eligible families

Serious couple with little girl counting budget at home
Iakov Filimonov / Shutterstock

Approximately 4 million children from poorer households are at risk of missing out on the money because their parents haven't provided the IRS with their identification and payment details, according to a report from the nonpartisan Center on Budget and Policy Priorities.

The 4 million include:

  • 2.3 million kids who don't appear on a current tax return but who have health insurance.
  • Uninsured children who aren't accounted for on tax returns.
  • About 1.6 million babies expected in 2021 who will qualify for Medicaid coverage.

The IRS has said repeatedly that most households don’t have to do anything to get their child tax credit cash. But that's assuming the families have filed tax returns that provide the IRS with the income, banking and mailing address information needed to make the payments.

Many of the kids in danger of being left out are from immigrant families that are hesitant or unable to file their taxes, or they have parents who are struggling with IRS tools, including its child tax credit portal, the Center on Budget and Policy Priorities says.

How families can claim the money

Cheerful Father And Son Watching  Laptop Together, Relaxing On Couch At Home.
Prostock-studio / Shutterstock

Families who miss out on the child credit payments for July and August can get the IRS all of the necessary the information in time to start receiving their payments in September. They can then claim the first two installments on their 2021 taxes.

Households that don’t typically file their taxes will want to get their returns in immediately.

Meanwhile, parents who need to update their number of dependent children, banking information or mailing address have until Aug. 30 to make the changes via the IRS update portal, so the September payment will be in the correct amount and will go to the right place.

The portal also allows parents to opt out of the monthly payments in favor of taking a lump-sum next year at tax time — which could help reduce their tax liability, or be used for a big family splurge.

What to do if you won't get any child credit payments

Unhappy Family Sitting On Sofa Looking At Bills
Monkey Business Images / Shutterstock

If your child tax credit payments are missing, or if you earn too much to qualify, here are a few options to essentially give yourself a family stimulus check:

  • Deal with your debt. Credit cards are convenient, but if you’ve been relying on them to carry you through the pandemic, you may now be facing a pile of expensive interest. Tackle those balances by folding them into a lower-interest debt consolidation loan. You'll slash the cost of your debt, to help you pay it off faster.

  • Cut your insurance payments. If you haven’t shopped around for a better rate on your auto insurance lately, you might easily be paying hundreds of dollars too much each year. A little comparison shopping could find you a lower price for your coverage. You can use the same trick to get a better deal on homeowners insurance when the time comes to buy or renew your policy.

  • Turn your pennies into a portfolio. Even if you know very little about investing, you can still earn some returns in today’s red-hot stock market. A wildly popular app helps you build a portfolio using just your "spare change" from everyday purchases.

About the Author

Sigrid Forberg

Sigrid Forberg

Staff Writer

Sigrid is a staff writer with MoneyWise. Before joining the team, she worked for a B2B publication in the hardware and home improvement industry and ran an internal employee magazine for the federal government. As a graduate of the Carleton University Journalism program, she takes pride in telling informative, engaging and compelling stories.

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