The American Rescue Plan of 2021 expanded the Child Tax Credit (CTC) for the 2021 tax year. Even families without earned income are eligible for the CTC. This credit is based on two determining factors the child’s age as of 12/31/21 and the taxpayers’ adjusted gross income. Families with eligible children under the age of 6 may receive a total of $3600 (an increase of $600 for 2021) per qualifying child, and families with qualifying children under the age of 18 will receive $3000 per qualifying child.
Normally, taxpayers would receive this credit when they file their taxes. However, in the 2021 tax year, eligible families will automatically receive advance monthly payments totaling one-half of the 2021 Child Tax Credit. Starting mid-July, parents with eligible children under 6 will receive $300 per month. Parents with eligible children ages 6 – 17, will receive $250 per month. Your refund next year MAY be smaller because half of your credit will be upfront which is why you can opt out entirely or month by month (see Need More Info?)
This credit will be reduced and eventually phase out for taxpayers whose adjusted gross income is as follows:
· $75,000 for a single parent,
· $112,000 for heads of households, and
· $150,000 for married couples filing jointly.
To find out if you qualify for the Advance Child Tax Credit –
□ The program’s new rule for 2021 increases the age of eligible children to under 18
□ Increases the credit amount for children aged 0 – 5
□ Eligible taxpayers will automatically begin receiving one-half of the Child Tax Credit in a monthly advance payment beginning mid-July (you can choose not to receive advance payments – see Manage Payments under Need More Info?)
□ Eligible even if no earned income in 2019 or 2020
Are you eligible?
□ Families have a qualifying child or children
□ Families have their main home in the US for at least 6 months of the year (2021)
□ Families must be below income thresholds ($75,000/$112,00/$150,0000)
□ Families must have filed taxes in 2019 or 2020 or provided information to the IRS using the Non-Filers Tool (see below for link)
Is your child eligible?
□ Child is under 18 (as of 12/31/21)
□ Child has a valid social security number
□ Child is the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, half brother or sister, or descendant of any of them.
□ Child lived with the taxpayer for at least 6 months of the year (2021)
□ Child can be claimed as a dependent
Need more info? · Manage payments and Non-Filers Tools: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021 · Update your information with the IRS: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal · Check eligibility: https://www.irs.gov/credits-deductions/advance-child-tax-credit-eligibility-assistant · How does it work? www.childtaxcredit.gov · Resource: America Saves Child Tax Credit
And finally, watch out for scams. You can only receive the advance tax credit if you filed your taxes in 2019 or 2020 or registered using the IRS.gov portal. The IRS will never ask you for your personal information by phone call, text, email, or social media. If you are concerned, hang up, delete the message or block the caller. Use a trusted method to contact the IRS. Additionally, if you do receive a request via electronic messaging never click on a link.