CHILD TAX CREDIT – ADVANCE PAYMENTS
As part of the American Rescue Plan Act that was enacted in March 2021, the Child Tax Credit may be received in monthly payments for the remaining months in 2021.
The new law raised the age of qualifying children from 16 to 17, meaning some families will be able to take advantage of the credit longer. The IRS will pay half the credit in the form of advance monthly payments beginning July 15. Taxpayers will then claim the other half when they file their 2021 income tax return. Currently these changes are temporary and only apply to the 2021 tax year. It is also important to note that the monthly advance of the tax credit is a significant change. The credit is normally part of your income tax return and would reduce your tax liability. The choice to have the child tax credit advanced will affect your refund or amount due when you file your return.
Qualifications and How Much to Expect
The child tax credit and advance payments are based on several factors, including the age of your children and your income.
- The credit for children ages five and younger is up to $3,600 –– with up to $300
received in monthly payments. - The credit for children ages six to 17 is up to $3,000 –– with up to $250 received
in monthly payments.
To qualify for the child tax credit monthly payments, you (and your spouse if you file a joint tax return) must have:
- Filed a 2019 or 2020 tax return and claimed the child tax credit or given the IRS
- your information using the non-filer tool
- A main home in the U.S. for more than half the year
- A qualifying child who is under age 18 at the end of 2021
- Income less than certain limits
- less than $75,000 for single filers, $150,000 for married filing jointly (MFJ) filers and $112,500 for head of household (HOH) filers. The credit begins to phase out above those thresholds.
The IRS will automatically start issue the payments if your qualify.
IRS’s Child Tax Credit Update Portal and Opting Out
Using the IRS’s child tax credit and update portal, taxpayers can update their information to reflect any new information that might impact their child tax credit amount, such as filing status or number of children. Parents may also use the online portal to elect out of the advance payments or check on the status of payments. The IRS also has a non-filer portal to use for certain situations.