39 million households to get monthly child tax credit payments starting July 15

Around 39 million U.S. households will begin receiving periodic Child Tax Credit (CTC) payments worth up to $300 on July 15, a new benefit from the latest stimulus package, the Treasury Department announced Monday.

The $1.9 trillion American Rescue plan includes a one-year expansion of the CTC that increases the credit amount and allows it to be distributed in periodic payments in advance. Democrats want to extend the bolstered credit through 2025 as part of their infrastructure plan.

The maximum taxpayers can claim for the credit in 2021 is $3,600 for children under 6 and $3,000 for children between 6 and 17. Previously, the maximum tax credit was $2,000 per child under 17.

Households of approximately 65 million children — or 88% of U.S. kids — will be eligible for the payments, which will be delivered through direct deposit, paper check, or debit cards.

Additionally, the Internal Revenue Service is developing a portal where taxpayers eligible for the credit can update their information like income, marital status, or dependents.

Here’s what else you need to know about the monthly payments.

How much will my payment be?

Eligible households will receive half of their total payments in advance over the next six months beginning in July and ending in December. The monthly payments will be $250 for older children and $300 for children under 6.

Read more: Here's what's in Joe Biden's $1.9 trillion 'rescue plan' that could help your wallet

A single filer with children under 17 making up to $75,000 will receive the full payment for each child, while those earning up to $90,000 will get a reduced amount. Joint filers with children making up to $150,000 will get the full credit for their child, while those earning up to $170,000 will receive a smaller amount.

Single filers making over $200,000 and joint filers making over $400,000 will be eligible for the old credit, which is $2,000 per child under 17.

Who is eligible?

The IRS will use your 2020 federal tax return and income to determine whether you’re eligible for the credit. The advanced payments equal half of an eligible household's total credit, while the remaining half of th credit can be claimed on their 2021 tax return.

The payments would be made to eligible taxpayers who have a main home in the U.S. for more than half a year.

The CTC was also made fully refundable — another provision lawmakers want to make permanent — which allows taxpayers to get the credit as a refund even if it’s worth more than what they owe in taxes.

What should I do to claim the credit?

Currently, taxpayers shouldn’t take additional action to file for the credit besides filing their 2020 tax return if they haven’t done so already.

Taxpayers will be able to update their information such as income, filing status, or the number of qualifying children, but the IRS has yet to announce details on how that can be done.

Read more: Taxes 2021: Credits, deductions, and tax breaks for student loans and college costs

Additionally, eligible taxpayers who don't want to receive advanced payments for 2021 can decline to receive the monthly payments, but the IRS has yet to detail how.

Can the credit become permanent?

As part of his American Rescue Plan, President Joe Biden is proposing to extend the expansion of the CTC through 2025. He has previously said that the administration aims to make the benefit permanent.

Some lawmakers also support making permanent the expansion of the CTC and the expanded Earned Income Tax Credit (EITC).

"We must not allow these critical expansions to expire after one year," 40 Democratic senators wrote in a letter in March. "Doing so would result in a significant spike in child poverty, after we have made historic strides to end it. It would mean that millions of struggling adult workers would once again be taxed into poverty."

Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

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