In order to determine eligibility for the newly expanded 2021 Child Tax Credit, you will need to review your 2020 tax return. Should you qualify, you will begin receiving advanced IRS checks beginning on July 15, 2021 and ending December 15 2021.
The advanced payment amount equal up to 50% of the total Child Tax Credit, utilizing your 2020 income and filing status. The maximum monthly payment (per child) will be $300 or $250, depending on your child’s age and your income level.
If you claimed children as dependents in 2020 and will not be claiming them in 2021, you may opt out of receiving the advance payments by using the IRS online tool. Your actual 2021 Child Tax Credit will be determined based on your 2021 income level and the ages of your children as reported when you file your 2021 tax return. Any advance payments over the actual 2021 Child Tax Credit will need to be repaid to the IRS.
Alternatively, if you did not claim children in 2020, but will be in 2021, you may opt in to receive advance payments using the same IRS online tool. Each dependent can only be claimed under one taxpayer.
If you alternate claiming your children with another taxpayer, we encourage you review your personal agreement with the alternating taxpayer to assure the credit for 2021 is properly claimed.
To receive the monthly payment and increased tax credit, you must live in your main home located in the United States for more than half of the year of which you are filing.
If you are a single tax filer, your adjusted gross income (AGI) must be $75,000 or less, to qualify for the full child tax credit amount. At $240,000, single filers phase out of the tax credit entirely.
If you’re married and filing jointly with your spouse, your AGI needs to be $150,000 or less to qualify for the full child tax credit amount. At $440,000, couples will phase out of the tax credit entirely.
The credit phases out by $50 for every $1,000 of income over the threshold amounts for all filers,
Tax Credit Amount
The expanded Child Tax Credit, which was included in the American Rescue Plan Act (passed into law 03/11/2021), allows for a total credit of up to $1,600 for a child under the age of 6 and $1,000 for each child between the ages of 6 and 17. This is in addition to the previous Child Tax Credit amount of $2,000 for children under the age of 17.
The credit is fully refundable, which allows you to receive the benefits of the credit, regardless if you have income, or owe any income taxes.
IRS will be sending you a letter in January 2022 indicating the total payments sent. Please send us a copy of the letter, as we will need to know the total amount received when your 2021 tax return is prepared.
If you would like us to calculate your monthly Child Tax Credit payment, please contact us at 401-831-0200.