Advanced Child Tax Credit FAQs

 

 

The federal government passed legislation (The American Rescue Plan) that increased the amount of Child Tax Credit and modified it to be an advance payment refundable tax credit.  As of July 15th, most families are automatically receiving monthly payments of $250 or $300 per child without having to take any action. 

The American Rescue Plan increased the Child Tax Credit to $3,000 per child for children over the age of six and $3,600 for children under the age of six, and raised the age limit from 16 to 17. All working families will get the full credit if they make up to $150,000 for a couple or $112,500 for a family with a single parent (also called Head of Household). Find the most current information regarding the Advance Child Tax Credit at the IRS Coronavirus Tax Relief webpage.

Watch this short video about the Child Tax Credit.

 

  • What is the Child Tax Credit?

    The Child Tax Credit is a tax benefit to help families who are raising children. 

    • How will the Child Tax Credit give me more help this year?

    The American Rescue Plan, signed into law on March 11, 2021, expanded the Child Tax Credit for 2021 to get more help to more families.

    • $3,600 for each child under age 6.
    • $3,000 for each child ages 6 to 16 00
    • It also now makes 17-year-olds eligible for the $3,000 credit.
    • Previously, low-income families did not get the same amount or any of the Child Tax Credit. Under the American Rescue Plan, all families in need will get the full amount.
    • To get money to families sooner, the IRS began sending monthly payments (up to half of your total amount) this year, starting in July.
    • It will be broken up into monthly payments, which means payments of up to $300 per child under age 6 and $250 per child ages 6 to 17.
    • You’ll get the remainder of the credit when you file your taxes next year.
    • Do I qualify for the Child Tax Credit?

    Nearly all families with kids qualify. Some income limitations apply. For example, only couples making less than $150,000 and single parents (also called Head of Household) making less than $112,500 will qualify for the additional 2021 Child Tax Credit amounts. Families with high incomes may receive a smaller credit or may not qualify for any credit at all. For more detail on the phase-outs for higher income families, see “How much will I receive in Child Tax Credit payments?”

    If you have any questions about your unique circumstances, visit irs.gov/childtaxcredit2021

    • Do I need to do anything to make sure I receive my payments?

    Most families didn’t have to do anything to begin receiving the Child Tax Credit payments. If you filed taxes this year (your tax return for 2020), filed last year (your tax return for 2019), or if you signed up for Economic Impact Payments ( “stimulus checks”) using the IRS’s Non-Filer tool last year, the IRS is automatically sending you monthly payments.

    If you did not have to file your taxes this year or last year, and you did not register for Economic Impact Payments last year, you can still sign up for the Child Tax Credit payments. The good news is that through the IRS Non-filer Sign-up Tool you can also apply for any Economic Impact Payments (“stimulus checks”) that you’re entitled to but may not have received yet.

    • Can I use the Non-filer Sign-up Tool to apply for Economic Impact Payments (“stimulus checks”) even if I am not signing up for the Child Tax Credit?

    Yes. If you haven’t filed taxes in a while and have not yet received the Economic Impact Payments (“stimulus checks”) that you were eligible for, you can use the Non-filer Sign-up Tool to apply for them whether or not you are also applying for Child Tax Credit payments. See “I haven’t filed taxes in a while. How can I receive this benefit?” to see if the Non-Filer Sign-up Tool is for you.

    • I received the Child Tax Credit for a child on my 2020 taxes (filed in 2021), but they no longer live with me. What should I do?

    If you will not be eligible to claim the Child Tax Credit on your 2021 return (the one due in April of 2022), then you should go to the IRS website to opt out of receiving monthly payments using the Child Tax Credit Update Portal. Receiving monthly payments now could mean that you have to return those payments when you file your tax return next year. If things change again and you are entitled to the Child Tax Credit for 2021, you can claim the full amount on your tax return when you file next year.

    If you have any questions about your unique circumstances, you should visit irs.gov/childtaxcredit2021.

    • What of I do not want to receive the Advanced Child Tax Credit now?

    Here are some cases where unenrolling from the 2021 advance child tax credit program could be a good idea: 

    • You’d rather have one large payment next year instead of seven smaller payments spanning 2021 and 2022. This could be the case for families saving up for a big expense, those who’ve budgeted that money to pay off outstanding debt or are accustomed to getting a bigger refund at tax time. 
    • You know your household’s circumstances or tax situation will change (or they’ve already changed) this year and don’t want to deal with having to update your information in the IRS portal. This could be the case for divorced parents who alternate custody of a child. 
    • You’re concerned the IRS might send you an overpayment based on old tax information from 2020 or 2019, and you don’t want to worry about paying any of that money back next year. That could be the case if your household income goes up because you’ve returned to work or got a new job. It could also be the case if a dependent you claimed previously is aging out of an age bracket before the end of 2021.
          • If I need to opt out of the Advanced Child Tax Credit, what do I need to do? 

           If you want to unenroll before the Aug 30 (Oct 4, Nov 1 and Nov 29)  check, you have until 9 p.m. PT on Aug. 30. You can opt out anytime in 2021 to stop receiving the rest of your remaining monthly advances, even if you’ve already received the first few payments To unenroll, the IRS said you must opt out three days before the first Thursday of the month in order to not receive the next month’s payment. If you miss a deadline, the IRS said you will get the next scheduled advance payment until the agency can process your request to unenroll. According to the IRS, currently, if you unenroll then you can’t re-enroll yet. Starting sometime in September, you should be able to opt back in.Here’s how to unenroll:

          1. Head to the new Child Tax Credit Update Portal and click the Manage Advance Payments button.
          2. On the next page, sign in using your IRS or ID.me account. If you have neither, the page will walk you through setting up an ID.me account. You’ll need an email address, a photo ID, your Social Security number and a smartphone or tablet to verify your identity. 
          3. On the next page, you can see your eligibility and unenroll from the monthly payments.
          • When will I start receiving my monthly payments?

          People who receive payments by direct deposit will get their first payment on July 15, 2021. After that, payments will go out on the 15th of every month. (In August the payment will go out on August 13th since the 15th falls on a weekend.) If you haven’t provided the IRS with your bank account information on a recent tax return, a check will be sent out to you around the same time to the address the IRS has for you.

          • How much will I receive in Child Tax Credit payments?

          Most families will receive the full amount: $3,600 for each child under age 6 and $3,000 for each child ages 6 to 17. To get money to families sooner, the IRS is sending families half of their 2021 Child Tax Credit as monthly payments of $300 per child under age 6 and $250 per child between the ages of 6 and 17.

          This amount may vary by income. These people qualify for the full Child Tax Credit:

          • Married couples with income under $150,000
          • Families with a single parent (also called Head of Household) with income under $112,500
          • Everyone else with income under $75,000

          These people qualify for at least $2,000 of Child Tax Credit, which comes out to $166 per child each month:

          • Married couples with income under $400,000
          • Families with a single parent (also called Head of Household) with income under $200,000
          • Everyone else with income under $200,000

          Families with even higher incomes may receive smaller amounts or no credit at all.

          • Where will the IRS send my money?

          The IRS sends your payments by direct deposit to the bank account they have on file. If they don’t have bank account information for you, a check will be mailed to you. If you receive your payment electronically, it will show up in your bank account labeled CHILDCTC.

          • What if I want to give the IRS new bank account information?

          You can add or change your bank account information through the IRS’s Child Tax Credit Update Portal. Due to processing times, changes might not be reflected immediately on your next payment.

          • Can get I more of the Child Tax Credit in a lump sum when I file my 2021 taxes instead of getting half of it in advance monthly payments?

          Yes, you can opt out of monthly payments for any reason. To opt-out of the monthly payments, or unenroll, you can go to the IRS Child Tax Credit Update Portal. If you do choose not to receive any more monthly payments, you’ll get any remaining Child Tax Credit as a lump sum next year when you file your tax return.

            • I haven’t filed taxes in a while. How can I receive this benefit?

            You may be eligible for Child Tax Credit payments even if you have not filed taxes recently. Not everyone is required to file taxes.

            This year, Americans were only required to file taxes if they earned $24,800 as a married couple, $18,650 as a Head of Household, or $12,400 as a single filer. If you had total income in 2020 below those levels, you can sign up to receive monthly Child Tax Credit payments using a simple tool for non-filers available on the IRS’s website.

            If you believe that your income in 2020 means you were required to file taxes, it’s not too late. You can still file a return to get monthly Child Tax Credit Payments in 2021, as well as other tax benefits or a refund you are eligible to claim. For help filing a past due return, visit the IRS website.

            • Will I lose out if I didn’t sign up in time to get a payment on July 15?

            No. Everyone will receive the full Child Tax Credit benefits they are owed. If you sign up for monthly payments later in the year, your remaining monthly payments will be larger to reflect the payments you missed. If you do not sign-up in time for monthly payments in 2021, you will receive the full benefit when you file your tax return in 2022.

            • If I sign up for the Child Tax Credit, will it affect my other government benefits (like SSI, SNAP, TANF, or WIC)?

            No. Receiving Child Tax Credit payments is not considered income for any family. Therefore, it will not change the amount you receive in other Federal benefits. These Federal benefits include unemployment insurance, Medicaid, SNAP, SSI, SSDI, TANF, WIC, Section 8, or Public Housing.