June 7, 2021
The IRS has started sending letters to over 36 million American families who may qualify to receive monthly Child Tax Credit payments based on tax returns they filed. The letters are going to families who may be eligible based on information they included in their 2019 or 2020 tax return, or who used the Non-Filers tool on IRS.gov last year to register for an Economic Impact Payment. The payments will be starting July 15.
The expanded and now-advanceable Child Tax Credit was authorized by the American Rescue Plan Act that was enacted in March. In addition, families who are eligible for advance Child Tax Credit payments will receive a second, personalized letter with an estimate of their monthly payment, which begins July 15.
Most families don't need to take any action to get the payment. The IRS will typically calculate the payment amount based on 2020 tax returns. If that return is not available, either because it has not yet been filed or it has not yet been processed, the IRS will determine the payment using the 2019 return instead.
Eligible families will begin receiving advance payments either by direct deposit or check. The payment will be up to $300 per month for each qualifying child under age 6, and up to $250 per month for each qualifying child ages 6 to 17. The IRS will issue advance Child Tax Credit payments on July 15, August 13, September 15, October 15, November 15 and December 15.
Eligible families should file tax returns soon
Individuals and families who haven't yet filed their 2020 return or 2019 return, including people who don't normally file a tax return due to experiencing homelessness or other factors – to file it as soon as possible so they can receive any advance payment they're eligible for by ensuring that the IRS has their most up to date bank information and details about their qualifying children.
For most people, the fastest and easiest way to file a return is by using the Free File system, available on the IRS website. The IRS will add additional tools and online resources to help with the advance Child Tax Credit over the summer. One of the tools will enable families to unenroll from receiving these advance payments, and instead receive the full amount of the credit when they file their 2021 return next year.
Later this year, individuals and families will be able to go to IRS.gov and use a Child Tax Credit Update Portal to notify IRS of changes in their income, filing status, or number of qualifying children; update their direct deposit information; and make other changes to make sure they're receiving the correct amount as fast as possible.
Other tools coming soon
The IRS created a Advance Child Tax Credit 2021 page at IRS.gov/childtaxcredit2021 to provide the most up-to-date information about the credit and the advance payments.
Over the next few weeks, the page will also feature other useful new online tools, including:
An interactive Child Tax Credit eligibility tool to help families determine whether they qualify for the Advance Child Tax Credit payments.
The Child Tax Credit Update Portal, which will initially enable anyone who has been determined to be eligible for advance payments unenroll/ to opt out of the advance payment program. Later this year, it will allow people to check on the status of their payments, make updates to their information, and it will be available in Spanish.
Child Tax Credit Changes
The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for qualifying children under the age of 6 and to $3,000 per child for qualifying children between ages 6 and 17. Prior to 2021, the credit was worth up to $2,000 per eligible child, and 17 year-olds were not considered as qualifying children for the credit.
The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:
$75,000 or less for singles,
$112,500 or less for heads of household, and
$150,000 or less for married couples filing a joint return and qualified widows and widowers.
For most people, modified AGI is the amount shown on Line 11 of their 2020 Form 1040 or 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every extra $1,000 in modified AGI.
In addition, the entire credit is fully refundable for 2021, meaning that eligible families can get it even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.
The IRS has been urging people to share this important information about the Child Tax Credit as well as other important benefits with people who have children. Community groups, non-profits, educational organizations, and anyone with connections can share this information; the IRS will be providing more materials and information to share via social media, email and other methods soon.
Resources:
IRS page Advance Child Tax Credit Payments in 2021- up-to-date information on the Child Tax Credit and advance payments.
IRS answers FAQ'S on this page: 2021 Child Tax Credit and Advance Child Tax Credit Payments Frequently Asked Questions