Here's What You Need to Remember: Take note that similar situations could be seen under the massive $1.8 trillion American Families Plan, which aims to further extend the child tax credit—potentially giving parents and legal guardians a total of up to $16,200 of cash per child.

As the Internal Revenue Service and the Treasury Department wind down their disbursement of the remaining coronavirus stimulus checks under the American Rescue Plan, it appears that most eyes have now pivoted to the expanded child tax credit.

Know that the IRS already has confirmed that monthly payments from the new $3,000 or $3,600 child tax credit—considered by some as essentially a “fourth” stimulus check—will begin hitting the bank accounts of millions of cash-strapped Americans beginning in July.

“We will launch by July 1 with the absolute best product we are able to put together,” IRS Commissioner Chuck Rettig recently said on the Senate floor.

This is in large thanks to President Joe Biden’s $1.9 trillion legislation, which drove forward the expansion of child tax credits that generally allowed families to claim a credit of up to $2,000 for children under the age of seventeen. That now has been extended to lower-income families who otherwise wouldn’t receive such a cash windfall. Because of this change, families are now eligible to claim as much as $3,600 per year for a child under the age of six and up to $3,000 for children between six and seventeen.

This all means for a family headed by a couple earning less than $150,000 or an individual making under $75,000, they are now eligible to receive a $250 or $300 payment every month. In one particular scenario, a family of four earning less than $150,000 could potentially expect to bag more than $14,000 in pandemic relief this year alone.

The Poison Pill? 

However, there could be rougher waters ahead.

The IRS has put out a warning that some tax credit recipients may have to pay back a portion of these benefits during tax season next year. This is due to the details of the legislation that direct the federal government to issue advance payments of the child tax credit in periodic installments.

These advanced payments, though, are largely based off the agency’s estimates on available data, such as overall income, marital status, and number and age of qualifying dependent children. If there are any outdated or inaccurate data, they have the potential to trigger an overpayment of the child tax credit—meaning that the impacted individual will be on the hook for any difference in the final amount.

Take note that similar situations could be seen under the massive $1.8 trillion American Families Plan, which aims to further extend the child tax credit—potentially giving parents and legal guardians a total of up to $16,200 of cash per child. Those with children living at home could receive a monthly $300 check per each child through the end of 2025.

All eligible parents should understand that in order to get their hands on the new benefits, they must file a 2020 tax return. Without a return, the IRS will not have the necessary information it needs to deliver the tax credits.

Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn. This article first appeared earlier this year.

Image: Reuters.