Child Tax Credit 2021
The American Rescue Plan Act of 2021 (ARPA) enacted in March 2021 made changes to the Child Tax Credit that may benefit many taxpayers.
- Amount has increased for certain taxpayers
- Is fully refundable (meaning you can receive it even if you don’t owe the IRS)
- May be partially received in monthly payments
- Raised the age of qualifying children to 17 from 16, meaning some families will be able to take advantage of the credit longer.
The IRS will pay half of the credit in the form of advance monthly payments beginning July 15. Taxpayers will then claim half when they file their 2021 income tax 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 each child ages five and younger is up to $3,600–with up to $300 received in monthly payments.
- The credit for each child ages six to 17 is up to $3,000–with up to $250 received in monthly payments.
You can take full advantage of the credit if your income (specifically, your modified adjusted gross income) is less than $75,000 for single filers, $150,000 for married filing jointly filers and $112,500 for head of household filers. The credit begins to phase out above those thresholds.
Higher-income families (e.g., married filing jointly couples with $400,000 or less in income or other filers with $200,000 or less in income) will generally get the same credit as prior law (generally $2,000 per qualifying child) but may also choose to receive monthly payments.
Taxpayers generally won’t need to do anything to receive any advance payments as the IRS will use the information it has on file to start issuing the payments.
The IRS has launched the Child Tax Credit Update Portal to give taxpayers the option to unenroll from the monthly advance payments as well as update their current information. The choice to receive the advance monthly payments may affect your amount due or refund when filing your 2021 tax return.
- The IRS also has a non-filer portal to use for certain situations.
IRS Website on 2021 Child Tax Credit
We’re here to help you
Call your tax advisor at (888) 388-1040 to discuss your situation. We can help you determine if you should unenroll, but we cannot help you unenroll using the new update portal as their is two factor authentication that occurs in the process.
