Advance Child Tax Credit Payments in 2021
Updated: Sep 21, 2021
IRS - The American Rescue Plan raised the maximum Child Tax Credit (CTC) in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for children ages 6 through 17. Before 2021, the credit was worth up to $2,000 per eligible child.
The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:
$75,000 or less for singles,
$112,500 or less for heads of household and
$150,000 or less for married couples filing a joint return and qualified widows and widowers.
For most people, modified AGI is the amount shown on Line 11 of their 2020 Form 1040 or 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every $1,000 in modified AGI. In addition, the credit is fully refundable for 2021. This means that eligible families can get it, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.
The American Rescue Plan directs the IRS to make advance monthly payments of half the estimated CTC. The IRS will make payments from July through the end of the year. The first monthly payment will be made on July 15, 2021.
Eligible families will receive a payment of up to $300 per month for each child under age 6, and up to $250 per month for each child ages 6 through 17. Most families will begin receiving monthly payments automatically next month without any further action required.
See the IRS website for more Q&A on Advance Child Tax Credit Payments.
To qualify for advance Child Tax Credit payments, you — and your spouse, if you filed a joint return — 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.
$75,000 or less for singles,
$112,500 or less for heads of household, and
$150,000 or less for married filing jointly taxpayers and qualified widows/widowers.
Check your eligibility at the IRS Child Tax Credit Eligibility Assistant.
Use this Update Portal tool to:
Check if you’re enrolled for advance payments
Unenroll from advance payments
Update your bank account and mailing address
View your payments
In the coming months you will be able to use the tool to notify the IRS about changes in your circumstances for 2021 in certain situations that will update the amount of your advance payment.
Unenroll From Advance Payments
You may want to unenroll from receiving advance Child Tax Credit payments for several reasons, including if you expect the amount of tax you owe to be greater than your expected refund when you file your 2021 tax return. The payments you receive are an advance of the Child Tax Credit that you would normally get when you file your 2021 tax return. Because these credits are paid in advance, every dollar you receive will reduce the amount of Child Tax Credit you will claim on your 2021 tax return. This means that by accepting advance child tax credit payments, the amount of your refund may be reduced or the amount of tax you owe may increase.
Examples that you may not qualify for the Child Tax Credit when you file your 2021 return:
Your income in 2021 is too high to qualify you for the credit.
Someone else (an ex-spouse or another family member, for example) qualifies to claim your child or children as dependents in 2021.
Your main home was outside of the United States for more than half of 2021.
You may avoid owing tax to the IRS if you unenroll and claim the entire credit when you file your 2021 tax return.
Unenroll from Advance Payments at the IRS Child Tax Credit Update Portal.
Note that there is a deadline to unenroll and both spouses of a married couple filing jointly need to unenroll before the payments are made.
See the IRS website for more Q&A on unenrolling from Advance Payments.
New tool helps non-filers register
For families who don’t normally file an income tax return, another easy option is to register for these advance payments using the new Non-filer Sign-up Tool, introduced recently, and available only on IRS.gov. Among other things, the tool asks users to supply current bank information, along with key details about themselves and their qualifying children. The tool then automatically fills in a very basic 2020 federal income tax return that is electronically sent to the IRS.