On July 15, 2021, the IRS will start sending monthly child tax credit payments to qualifying families around the country.
Thanks to the American Rescue Plan Act passed in March 2021, families claiming the child tax credit in 2021 will receive up to $3,000 for each qualifying child ages 6-17 and up to $3,600 for each child under the age of 6. Under previous law, taxpayers received a child tax credit in the amount of $2,000 for qualifying children under age 17.
Instead of claiming the total credit amount on 2021 tax returns next year, the IRS will begin paying half of the credit amount in advance through monthly payments. This means that from July – December qualifying families will receive $250 a month for children ages 6-17 (total of $1,500) and up to $300 for children under 6 (total of $1,800). Taxpayers will claim the remaining 50% child tax credit on 2021 tax returns.
Taxpayers do not have to do anything to receive the payments. The IRS will use either 2020 or 2019 tax returns to determine eligibility. Similar to the stimulus payments, the IRS will use direct deposit information from your tax return to deposit the monthly credit into your account. However, if you do not have direct deposit, the IRS will send a paper check to your mailing address on file.
The IRS states that to qualify for the advance payments, “taxpayers must have:
- Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return; or
- Given us your information in 2020 to receive the Economic Impact Payment using the Non-Filers: Enter Payment Info Here tool; and
- A main home in the United States for more than half the year (the 50 states and the District of Columbia) or file a joint return with a spouse who has a main home in the United States for more than half the year; and
- A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number; and
- Made less than certain income limits.”
The tax credit will begin to phase out for married couples filing jointly with modified adjusted gross income (AGI) above $150,000, head-of-household returns above $112,500, and single filers with AGI above $75,000.
Following suit with the July 15 start date, the IRS will continue a similar deposit schedule every month, issuing subsequent payments on August 13, September 15, October 15, November 15, and December 15.
If you would like to update existing information or submit new information to the IRS to qualify for the child tax credit—such as having a baby in 2021, recently adopting a baby in 2021, or if you generally do not file a tax return—you may visit the IRS resource page at https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021. The IRS plans to feature online portals and new tools so taxpayers can seamlessly manage their information, inquire about eligibility, and track their payments.
Please contact us at (781) 247-5569 if you have any questions about the advance child tax credit payments and what it may mean for your situation.
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About Stu: With more than 30 years of experience as a tax professional, Stu Steinberg brings a broad depth of knowledge to his work with his clients. Stu founded Erock Tax to help provide tax and financial planning strategies to individuals, families and small businesses and is passionate about empowering his clients through education about their money health. Stu is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.