Table of Contents
- 1 How Much do You Get for Claiming a Child?
- 2 Advance Child Tax Credit Payments
- 3 How to Qualify for the Child Tax Credit
- 4 How to Estimate Your Child Tax Credit Amount
- 5 When and How Will the Advance Payments Arrive?
- 6 How Can You Find Out About a Payment That Has Gone Missing?
- 7 How the Child Tax Credit Will Affect Your Taxes
- 8 How Can I Opt-Out of Monthly Payments in Advance?
- 9 How to File Taxes Online in 3 Simple Steps - TurboTax Tax Tip Video
How Much do You Get for Claiming a Child?
This year, the child tax credit will rise to $3,600. The fully refundable credit is usually up to $2,000 per qualifying dependent and will increase to $3,600 in 2021.
IRS statistics indicate that 36 million Americans may be eligible for the child tax credit, or CTC, this year as part of the American Rescue Plan (TRP).
Check out this guide for more details about how much is the child tax credit 2021, how to qualify, how to claim the child tax credit, when to expect advance child tax credit payments, and how to opt-out.
Advance Child Tax Credit Payments
For the first time in U.S. history, recipients receiving CTCs can also receive half of the credit as an advance child tax credit payment. For many families, this can result in an additional $300 per child per month for much-needed expenses help.
The IRS will use the age of your dependents on your most recent tax return to decide how much of an advance payment to send you each month. Five of the six payments have already been disbursed, and the final installment is set for Dec. 15.
Remember that the advance is just half of the entire credit and will be paid in six monthly installments beginning in July and ending in December. The remaining credit can be claimed on your 2021 tax return.
- Up to $3,000 ($250 monthly) per qualifying dependent child 17 or younger on Dec. 31, 2021.
- Up to $3,600 ($300 monthly) per qualifying dependent child under 6 on Dec. 31, 2021.
Many families have benefited from the enhanced child tax credit, but questions have also been asked about it: Does it apply to me? Should I opt out of the advance payments? What will the advance payments mean for my tax return?
Here are some things you need to know about the 2021 child tax credit.
How to Qualify for the Child Tax Credit
To take advantage of the credit, you must have a modified adjusted gross income of:
- Single: under $75,000.
- Head of household: $112,500.
- Married filing jointly: $150,000.
The credit begins to phase out above those thresholds.
First phaseout: If your income exceeds the limits as mentioned earlier but is less than $400,000 (married filing jointly) or $200,000 (single filing), you’ll be phased out (all other filing statuses).
For each $1,000 spent, your total credit per child might be lowered by $50. (or a fraction thereof).
Your credit will not be reduced below $2,000 per child as a result of this phaseout.
Second phaseout: Earnings of more than $400,000 (married filing jointly) or $200,000 (single filing) (other filing statuses).
The phaseout will continue to deduct $50 for every $1,000 spent, bringing your credit per child below $2,000 for the first time.
It’s possible that you won’t be able to acquire the credit at all
A non-filer sign-up tool is available on the IRS’s website for low-income families who do not usually file a tax return.
Some of the other child-related eligibility requirements for the child tax credit include:
• You must have supported the child for at least half of the previous year, and the child must have lived with you for at least half of that time (there are some exceptions to this rule; the IRS has the details here).
• The child is not permitted to submit a joint tax return.
How to Estimate Your Child Tax Credit Amount
The child tax credit calculator will ask you a few simple questions about your dependents and tell you if you qualify for the child tax credit and how much you may claim on your tax return.
When and How Will the Advance Payments Arrive?
Families who qualified for the CTC were automatically enrolled in the advance payment program by the IRS.
The payments are either deposited directly into your bank account or mailed to you as a paper check (depending on the IRS’s information on file for you, which is generally your most recent tax return).
Unless the 15th of the month falls on a weekend or holiday, the remaining 2021 advance payments will be made on the 15th of each month.
The next — and last — payment is set for Dec. 15. Monthly Payment Schedule
- Jul. 15.
- Aug. 13.
- Sept. 15.
- Oct. 15.
- Nov. 15.
- Dec. 15.
You can verify your bank information and preferred payment method via the IRS child tax credit update portal.
How Can You Find Out About a Payment That Has Gone Missing?
If you’re trying to track down a missing payment, double-check your address and bank information via the IRS portal first. Once you verify that it’s correct, consider that your bank might be processing the payment, or the check could be in transit.
If all of your info is correct and you still haven’t received your money, you can ask the IRS to issue a trace by filling out Form 3911 — but make sure you fall within the approved window for requesting a trace before you fax or mail the form:
How the Child Tax Credit Will Affect Your Taxes
The child tax credit is a dollar-for-dollar reduction in your tax payment. It’s also refundable, which means it can lower your tax payment to zero and perhaps result in a tax refund check for any remaining funds when you claim the child tax credit.
If the IRS overpaid your child tax credit, you’ll have to make up the difference on your tax return at the end of the year.
This might happen if your financial or personal circumstances have changed since your last return, such as your filing status, income, custody arrangements, or residency status.
You can claim 100 percent of the 2021 child tax credit on your taxes by opting out of advance payments (more on that below), or you can accept 50 percent of the money as an advance payment and claim the other 50 percent on your taxes later when you file your 2021 taxes (that’s the tax return due in April 2022).
For example, if you are eligible for a $3,000 child tax credit, you may get six $250 installments from July to December (for a total of $1,500) and then claim the remaining $1,500 on your tax return.
Instead, you might skip the advance monthly payment plan and collect the entire $3,000 credit when you complete your tax return.
How Can I Opt-Out of Monthly Payments in Advance?
You can opt-out of the advance monthly payments by contacting the IRS. Is there any benefit to doing so? It is dependent on your circumstances.
- Rather than receiving half of the credit in advance installments, you’d want to obtain it all at once when you file your return.
- You believe the amount you’ll owe the IRS will be more than your expected return.
- Your tax situation has changed dramatically since your last filing (e.g., higher income, your kid has moved out of the qualifying bracket, custody changes), and you’re concerned that the IRS may overpay you as a result of these changes.
You can unenroll through the IRS portal if you need to. For the December payment, the deadline to unenroll is Nov. 29.