First round of child tax credit payments goes out

JACKSONVILLE, Fla. – The first round of child tax credit payments started hitting parents’ bank accounts Thursday.

According to the Internal Revenue Service and U.S. Department of Treasury, payments were sent for almost 60 million children nationwide, totaling an estimated $15 billion.

“I believe this is actually a historic day,” President Joe Biden said of the program. “A historic day in the sense that we continue to build an economy that respects the dignity of working-class families.”

The money included in Thursday’s payments was part of the $1.9 trillion American Rescue Plan previously signed into law.

RELATED: Why you might want to opt out of the child tax credit payments

“To give you a sense of how transformative this is, this would be the largest one-year decrease in child poverty in the history of the America, starting now,” the president said of the tax credits.

The IRS said almost 9 in 10 payments were sent to parents via direct deposit. But, if like with the stimulus payments, you’re unsure of how yours will be sent, the IRS has a way to check your payment status.

Those eligible for the full enhanced credit will get $300 a month per child under age 6 and $250 a month per child age 6 to 17. Payments top out at $3,600 annually per child under 6 and $3,000 for children ages 6 to 17.

The payments will be sent out over the course of the next six months, being distributed on these dates (see table):

Parents will receive the remainder of the payments coming to them when they file their 2021 taxes.

In light of the volume of money changing hands, the Better Business Bureau is warning parents about scammers, who might try to take advantage of the situation by targeting unwitting families.

The consumer watchdog organization says that government agencies, whether it’s the IRS or Social Security Administration, will not call, text, direct message or email payment recipients, so do not be fooled by suspicious messages.

The group also says you should avoid giving out any personal information, such as your Social Security Number, banking details or credit card information over the phone or through email correspondence.

Frequently asked questions

Question: Will I need to pay taxes on this child tax credit come next year?

The simple answer is: no. Much like the stimulus checks, these are tax credits. But you will be required to report to the IRS that you received this money on your 2021 taxes, so that the IRS knows to give you the rest of the money.

Question: Can I get the money in a lump sum rather than in installments?

Yes, you have the choice to opt out of these payments and receive the full $3,000 or $3,600 on your 2021 tax return. Yet once you choose to opt out, you cannot opt back in.

To learn more about this tax credit, visit the IRS website.