Last year’s American Rescue Plan Act (ARPA) expanded and improved the child tax credit in three important ways:
- It increased the amount of the tax credit from $2,000 per child to $3,600 for children under the age of six and $3,000 for children ages 6-17.
- It made the credit fully refundable, providing financial assistance to many low-income families who don’t normally pay income taxes.
It provided advance payments of the credit for the final six months of 2021, providing immediate cash assistance to millions of families in the form of monthly checks.
The expanded and prepaid child tax credit helped lift many families with children out of poverty, helping them pay for child care, food, home and car repairs, and medical expenses last summer and fall. Most families with children received half of their child tax credit as monthly payments during the second half of 2021, thanks largely to nonprofits helping these families provide the necessary information to the Internal Revenue Service.
Families are due to receive the remainder of their child tax credits as refunds when they file their 2021 federal income taxes. Your nonprofit can do three things to help families in your community access the full child tax credit.
- Encourage families to file their federal taxes by April 18. This is particularly important for families that normally don’t file tax returns because their income isn’t high enough to owe federal taxes.
- Provide clear information about how to file for the child tax credit. The www.childtaxcredit.gov website has clear and accurate information you can share, including flyers, sample social media posts, and toolkits with resources for nonprofits.
- Connect people with free tax filing assistance. To get their child tax credit, families will need to fill out their IRS Form 1040 and Schedule 8812 (the child tax credit form) correctly. Free tax assistance for people with incomes below $58,000 is available through Volunteer Income Tax Assistance (VITA) and United Way MyFreeTaxes.