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Monthly child tax credit payments may mean a big tax surprise in the spring for some parents

July 22, 2021. Summarized by summa-bot.

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Mother holding a hand of her daughter in spring day outdoors

Many parents were thrilled to have hundreds of dollars suddenly land in their bank accounts last week, as the Internal Revenue Service distributed the first of six monthly child tax credit payments.

(CNN)Many parents were thrilled to have hundreds of dollars suddenly land in their bank accounts last week, as the Internal Revenue Service distributed the first of six monthly child tax credit payments.

Unlike the three rounds of stimulus checks that many Americans received during the pandemic, the monthly deposits are actually early payments of families' estimated child tax credits for 2021.

That's when they have to reconcile the monthly payments they already received with the actual amount of child tax credit they qualify for.

More low-income parents will also become eligible for the child tax credit because the relief package makes it fully refundable.

RELATED: IRS adds tools to help parents claim expanded child tax credit payments

If they receive $550 a month this year, they'll get only a $700 credit on their 2021 tax return, he said.

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