The American Rescue Plan: What You Need to Know About the Child Tax Credit


The American Rescue Plan signed into law on March 11, 2021, provides qualifying families with additional financial relief including, temporarily expanding the child tax credit. For the 2021 tax year, the child credit increases to $3,000 per child aged 17 or younger and $3,600 for children under the age of six. That’s an increase from the original $2,000 child tax credit, which was only available for children aged 16 or younger.

When Will You Receive the Child Tax Credit Payments?

Under this new law, up to half of the 2021 child tax credit could be paid out in periodic payments starting July 15. Tax payors can get an advance on up to half of the tax credit throughout 2021 in monthly payments from July through December and the remainder when they file their taxes in 2022. You could choose to opt-out of the advance payments if you prefer to get the money as a lump sum when you file your 2021 taxes.

Which Parent Will Receive Payments if You’re Separated or Divorced?

It is likely the child tax credit payment will be paid to the taxpayer (the first name listed on a joint return). If you are recently separated, you would want to register at a portal that the IRS is creating to keep current on the payment and to opt-out if you so choose. The IRS portals opened on July 1, 2021. It is in your best interest to get ahead of this issue as you do not want to be paying your attorney to write letters and chase down payments of $250-$300 per child for six months.

Can the Child Tax Credit Affect Child Support?

The child tax credit payments may also affect the calculation of child support payments. In California, guideline child support is calculated based on net income. However, lawyers are consulting with various software manufactures to determine how they are providing for this tax credit in the calculation of child support.

If you have questions about the American Rescue Plan’s impact on child support or how the child tax credit can affect you and you children, you should meet with an experienced family law attorney. Contact The Reape-Rickett Law Firm to meet with an experienced family law attorney by clicking here or calling us at 888-851-1611.

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