How does the $300 direct deposit Child Tax Credit work, and what are the eligibility requirements?

What Is the “$300 Direct Deposit Child Tax Credit”?

In 2021, the American Rescue Plan Act (ARP) temporarily expanded the Child Tax Credit (CTC). Families received:

• $300/month per child under 6, or

• $250/month per child ages 6–17,

• From July to December 2021, as advance payments of their total annual credit.

This monthly advance aimed to offer immediate financial support, as opposed to the traditional lump-sum refund when taxes are filed.

How It Worked: Mechanics of the Program?

1. Automatic enrollment: If you filed your 2019 or 2020 tax return or used the IRS Non-Filer Tool, the IRS auto-enrolled you based on your information .

2. Advance payments: You received half of your annual credit upfront. For example, a child under six qualified for $3600/year—meaning monthly payments of $300.

3. Duration: Payments were issued monthly from July to December 2021—six total installments.

4. Rest at tax time: The remaining half of the credit was claimed when you filed your 2021 tax return.

5. Opt‑out option: Families preferring a lump-sum could unenroll monthly via the IRS update portal.

Eligibility Requirements

To qualify for these $300 direct deposit payments, families had to meet several conditions:

1. Child Criteria

   • Age: Under 6 for $300/month; ages 6–17 for $250/month.

   • Relationship & Status: Must be your dependent, U.S. citizen, national, or resident alien.

   • Residency: Lived with you for over half the year.

   • Support: Didn’t provide more than half their own support.

   • SSN: Must have a valid Social Security Number before filing.

2. Household Income

   • Full, advanced credit:

     • Married filing jointly: up to $150K AGI

     • Head of household: up to $112.5K

     • Single filers: up to $75K

   • Phase-out: Above these thresholds, credit reduces by $50 per $1,000 income.

   • Extended thresholds: Even if over these limits, families could still claim the standard CTC (up to $2,000 per child) subject to higher phase-out limits: $200K single / $400K joint.

3. Tax & Filing Status

   • Filed 2019 or 2020 tax returns or used the IRS Non-Filer Tool.

   • For non-filers, registration via the IRS Non-Filer Sign‑Up Tool was required.

   • IRS Update Portal: Used to check eligibility, opt out, or adjust banking info.

How to Claim It (If It Returns)?

If similar monthly CTC payments resume, here's how families should prepare:

1. File timely tax returns (or use Non‑Filer Tool).

2. Re‑enroll via IRS portal or stay opted in.

3. Provide bank info for direct deposit.

4. Report household changes (new child, income shifts, SSN updates) promptly.

Key Takeaways

• The $300 direct deposit CTC was a temporary 2021 program offering monthly relief.

• It required eligible children, SSNs, tax filing or IRS registration, and income under certain thresholds.

• Payments provided crucial assistance and reduced child poverty significantly.

• Though not currently active, similar programs may return. Families should stay informed and ensure tax compliance.