2021 Child Tax Credit
Barry Weller
By Barry L Weller, EA
The American Rescue Plan increased the Child Tax Credit from $2,000 per child to $3,000 per child for children from age 6 through age 17 and from $2,000 per child to $3,600 for children under age 6. This credit will affect nearly 30 million households. Parents with qualifying children are being issued advance child credit payments of up to $300 for each qualifying child. Starting July 2021, you may have noticed these tax credits for qualifying children being deposited into your bank account or sent to you from the IRS on the 15th of the month.
Children younger than 6 years old qualify for $300 per month each, while children ages 6 to 17 qualify for $250 per month each. For most people no action is necessary to receive these payments. The IRS sent direct deposits to most and paper checks to those who did not have valid direct deposit information on their records. These advance tax credit payments account for half of the tax credit available for tax year 2021. The other half of the child tax credit will be claimed when filing your 2021 taxes.
To Qualify for advanced payments the IRS states you must have:
Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return or
Given us your information in 2020 to receive the Economic Impact Payment with the Non-Filers: Enter Payment Info Here tool or
Given us your information in 2021 with the Non-Filer: Submit Your Information tool; and
Lived in a main home in the United States for more than half the year (the 50 states and the District of Columbia) or filed a joint return with a spouse who has a main home in the United States for more than half the year; and
A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number; and
Made less than certain income limits.
Some taxpayers can choose to opt out of these advanced payments. To do this you must log on to the link below through the IRS website and update your profile accordingly.
https://www.irs.gov/credits-deductions/child-tax-credit-update-portal
If you choose to opt out of this advanced payment you will be issued the full or remaining balance of your Child Tax Credit at the time of filing your 2021 tax return. The unenrollment process takes roughly 7 days to process completely. If you choose to unenroll you will not be able to re-enroll until later in September.
Barry L Weller, EA is the president of Barry Weller & Associates, Inc. with offices at 19 N Reading Ave, Boyertown, PA 19512 Phone (610) 367-8280 He is an enrolled agent, licensed to represent taxpayers before the IRS.