Advanced Child Tax Credit | FAQs
The Child Tax Credit (CTC) is a credit available to individuals who claim a child as a dependent and meet certain conditions. Due to COVID-19, this credit has been expanded for many taxpayers. Here are some FAQs that may help you determine if you’re eligible and how much you could receive.
What are the changes to the Child Tax Credit?
The American Rescue Plan (ARPA) of 2021 expanded the Child Tax Credit (CTC) for the tax year 2021 to help families financially due to hardship from COVID-19. The expanded credit:
Increases the CTC amount for many taxpayers
Provides advance monthly payments
Includes children who turn age 17 in 2021
Is fully refundable for people who live in the United States for more than 6 months, which means taxpayers who don't have earned income or don't owe any income tax can still benefit from it.
Who is eligible for the expanded CTC?
Eligibility for the expanded CTC is the same for the CTC. The child must be claimed on your tax return and:
Be related to you
Live with you for at least six months during the tax year
Be a U.S. citizen, national, or resident alien with a Social Security number
The amount of the CTC is phased out depending on your filing status at the following AGI:
Married filing joint and qualifying widows and widowers: $400,000
Head of household, single and married filing separate: $200,000
However, expanded CTC will be phased out at a lower AGI than the normal CTC:
Married filing joint and widows/widowers: $150,000
Head of household: $112,500
Single: $75,000
The IRS says that roughly 39 million households, which includes 88% of children in the United States, will receive the monthly payments without any further action required. To check your eligibility, you can use the Advance Child Tax Credit Eligibility Assistant.
How much are the credit and advance payment amounts?
Families can receive up to $3,600 per qualifying child under age 6 and $3,000 per qualifying child age 6-17. Typically, the CTC provided a $2,000 credit per qualifying child under the age of 17 at the end of the year, but now children who turn 17 in 2021 are now eligible.
The IRS will distribute 50 percent of the estimated amount of your 2021 Child Tax Credit as advanced monthly payments from July 2021 to December 2021. Monthly payments will be up to $300 per month for children under age 6 and up to $250 for children age 6-17, totaling in advanced payments of up to $1,800 for children under age 6 and $1,500 for children age 6-17.
The remaining 50 percent will be claimed when you file your 2021 tax return.
When will the advance payments be distributed?
Advance payments will be made regularly on the 15th of each month from July to December 2021, unless the 15th falls on a weekend or holiday. Since this is an advanced credit, taxpayers will receive the payments for January to June 2021 when they file their 2022 tax returns.
How do I claim the credit?
If you have already filed your 2020 tax return, then there is no further action needed. Taxpayers who are required to file but still haven’t must file to be eligible for the advance payments.
For families who are not required to file, the IRS opened a portal on June 15, 2021, that allows you to sign up for the advance payments of the Child Tax Credit without filing a tax return. You can use the Child Tax Credit Non-Filer Sign-Up Tool if:
You are not required to file a 2020 tax return, didn’t file one, and don’t plan to; and
You have your main home here in the US for more than half the year.
How will I receive the monthly advanced CTC payments?
The method you receive your payments depends on what information the IRS has on file. You may receive payment through direct deposit, paper check, or debit card.
Can I decline advance payments of the CTC?
If you do not want to receive monthly advanced CTC payments and prefer to receive them as one lump sum after your file your tax return, the IRS has opened a portal to unroll for advanced payments.
Can I update my bank account information?
In addition to unenrolling for the advance payments, you can also use the Child Tax Credit Update Portal to provide or update your bank account information for monthly payments that will be sent beginning in August.
Still need to file your 2020 taxes?
Give us a call at (360) 922-0235 and we can help! Our tax preparers stay up to date with all the latest tax changes and can help you answer questions you may have about this credit.
Disclaimer: This material is prepared for informational purposes only, and is not tax advice. Please speak with a tax professional or visit the additional resources below to see how this information may apply to you.
