Fifth Child Tax Credit Payment: What You Need to Know

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You may get a pleasant surprise when you see your bank account balance.

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Key points

• The expanded Child Tax Credit is helping millions of families shore up their finances.
• The fifth of six monthly installment payments for the credit should be available in bank accounts today.

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The American Rescue Plan, the massive pandemic relief bill that was passed in March of 2021, is perhaps best known for approving a third round of direct stimulus checks. But another important provision of the bill was the expansion of the Child Tax Credit.

Normally, the Child Tax Credit is worth up to $2,000 per child and is paid in the form of a tax refund. This year, the credit is worth up to $3,600 for children under the age of 6, and up to $3,000 for children aged 6 to 17. The boosted credit is also now fully refundable, whereas in the past, it was only partially refundable. This means that if a recipient has no tax liability this year, they can still receive the full value of the credit.

Another key change is that half of the Child Tax Credit is being paid in monthly installments, with the remainder to be paid in 2022. Those monthly payments began in July, and today, those in line for a fifth payment should see that money hit their bank accounts.

A payday at just the right time

These days, many families are grappling with rising living costs as inflation continues to rear its ugly head. The U.S. Bureau of Labor Statistics recently released its October data for the Consumer Price Index, and it found that the cost of common goods rose 6.2% from the previous year. That's a huge hike, and one a lot of people can't afford. And so the fact that some people are getting money from the boosted Child Tax Credit is a very positive thing.

When will the boosted credit run out?

Following today's installment payment, Child Tax Credit recipients can look forward to just one more monthly payment in mid-December. But there's some good news. Lawmakers have proposed extending the boosted credit for another year, which means families may be in line for more generous payments in 2022 as well.

Furthermore, even once the Child Tax Credit reverts to its former (lower) value, lawmakers intend to keep it fully refundable. And that alone could put a lot more money in people's hands.

Will any more stimulus aid come through this year?

Aside from that December Child Tax Credit payment, additional stimulus aid is unlikely in 2021. The reason? While inflation may be wreaking havoc on many household budgets, the economy itself is in pretty decent shape. Though it's not fully recovered from the pandemic, the jobless rate has steadily declined, and recent weekly unemployment claims have been reaching pandemic-era lows. In light of that, a widespread round of direct stimulus checks is unlikely in the near term.

Those collecting the Child Tax Credit should remember, though, that the monthly installment payments they're getting this year only represent half of their total payout. And so a lot of families could be in for a generous lump sum payment once they file their 2021 tax returns in 2022 and put in for that refund.

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