Child Tax Credit 2021
What you need to know about Advance Child Tax Credit Payments
Starting July 15, parents will be eligible to receive a new monthly payment for each child. Called an advanced child tax credit, the monthly payments are connected to your income taxes. If eligible, parents may receive half of their annual tax credit money in the form of monthly payments. Parents will receive the other half of the credit when they file their income tax returns in April 2022.
Part of President Biden’s American Rescue Plan, the new advance payments add to the child tax credit, which has existed in some form since 1997. The amount has increased over the years and will increase again with the new program on July 15. For now, the advance payments and increased amounts run through Dec. 15, 2021.
Who is eligible for the advance child tax credit?
Parents with at least one child under the age of 18 who meet the income requirements are eligible for the full credit.
To qualify for the full tax credit, filers must make less than $75,000 if filing alone, less than $150,000 if filing jointly as a married couple and less than $112,500 for "head of household" filers, such as unmarried single parents.
How much will the payments be?
Under the full tax credit, monthly payments will be $300 per child under age 6 and $250 per child ages 6 to 17.
These payments will amount to half of the credit: $1,800 for younger children, and $1,500 for older children. Parents will claim the other half of the tax credit when filing taxes.
The advance payments and increased amount are currently set to end at the end of 2021. Unless a new law is passed, the tax credit will revert back to $2,000 per child, with no advance payment option.
How do I receive the advance child tax credit payment?
You can receive the advance child tax credit payment either by direct deposit or by check.
If you have previously set up direct deposit with the IRS, then you will receive payments in that bank account. To check your eligibility and bank account information, you can visit the child tax credit update portal. If you enrolled to receive direct deposit, you should see your routing number and the last four digits of your account listed in the portal.
All payments, including the July 15 payment, will be delivered by direct deposit if you are signed up. To change account information for the August payment, you can update your account information on the portal.
The payment cannot be split between accounts, and there is only one account number allowed per recipient.
If you are not signed up for direct deposit, then you will receive a check. To switch from receiving checks to direct deposit, you can add your bank routing number and bank account information in the portal.
The IRS encourages families to set up direct deposit in lieu of receiving checks because parents will get the money faster and it will eliminate the risk of lost or stolen checks, according to their website.
How do I claim the advance child tax credit on my taxes?
To balance this out on your taxes, you will need to claim and keep track of the advance payments you receive in 2021. Then you will report the amount and reconcile it with the amount you are eligible to receive on your tax return.
When will I receive the payments?
For those who are eligible and have not opted out, the first payments will start July 15.
The payment schedule is set for the rest of the year. Families will receive payments on these dates: July 15, August 13, September 15, October 15, November 15 and December 15.
These are the only scheduled payments, as the new program is currently set to end in six months, at the end of 2021.
Do I have to apply or sign up to receive the advance child tax credit?
No. You are automatically eligible for the child tax credit if you meet the requirements and if you filed your taxes in 2020.
If you didn't file your taxes in 2020, you can still file your back taxes to receive the advance child tax credit payments.
If you did not qualify to file taxes in 2020 but are eligible for the tax credit, you can use the IRS' Non-Filer sign-up tool. To use the tool, you will need to provide your personal information, including your name, mailing address, email, date of birth, Social Security or taxpayer ID numbers for you and your dependents, bank account and routing numbers and Identity Protection PIN from the IRS, if applicable.
More comprehensive information is available via irs.gov.
The IRS urges everyone to be on the lookout for scam artists trying to use advance Child Tax Credit payments as a cover for schemes to steal personal information and money. The IRS doesn't initiate contact by email, text messages, or social media channels to request personal or financial information – even information related to advance Child Tax Credit payments. Also, watch out for emails with attachments or links claiming to have special information about advance Child Tax Credit payments or refunds of the Child Tax Credit.
If you receive a suspicious IRS-related email, see the Report Phishing and Online Scams webpage for additional information.