The advance child tax credit payments in 2021 will begin going out in July, so it's time to see what it takes to qualify for the payments. For starters, you need to take one step with your taxes -- we'll explain. If you're eligible, you can get up to $3,600 for each of your qualifying dependents -- get an estimate here.
To get the entire $3,600 amount, your child must be 5 years old or younger. For a $3,000 payment, kids need to be between ages 6 and 17. (Kids older than 17 may qualify you for a partial payment.) The total amount you get will be split: Six monthly payments will arrive in 2021, and the rest of the money will come with your tax refund in 2022. (Here's some advice for how to spend your payments.)
We'll tell you more details about the new child tax credit, including what you need to know about filing your 2020 tax returns, whether the benefit will become permanent and how you can update any changes through a portal. Plus, here's everything else the new stimulus bill brings, including additional weeks of unemployment benefits. Also, here's how to claim up to $16,000 in child care expenses on your 2021 taxes. Additionally, if you haven't received your third stimulus check yet, here's how to track it. This story is frequently updated.
File your 2020 taxes by May 17 to make sure you get the child credit
To guarantee you receive your child tax credit payments, you need to file your 2020 tax return by May 17. Doing so will make sure the IRS knows who qualifies for the child tax credit in your family and can calculate the correct amount.
This goes for nonfilers too -- those who normally aren't required to file a tax return -- said IRS Commissioner Charles Rettig. "They need to file a tax return," Rettig said during a House hearing in March. "Even if they don't have the income levels, we need the return information," so the IRS knows which families qualify. If you are eligible for the service, the IRS has an online tool that lets you file your taxes for free.
How long will the advance child tax credit checks last? Will they eventually become permanent?
The child tax credit for 2021 is right now a temporary boost lasting only through the beginning of next year. Any changes to a 2022 child tax credit would need to happen in a separate bill. President Joe Biden could extend the credit to 2025 as part of his American Families Plan, but it would have to pass through Congress.
According to a report by the Wall Street Journal, Biden spoke with lawmakers on April 20 in the White House. One member of Congress said the president wanted to make the boosted child tax credit permanent, but that it would have trouble getting through the Senate. Biden said he planned to propose an extension to the credit for several years.
"The American Families Plan puts money directly into the pockets of millions of families," Biden said during his address to Congress on April 28. "Together, let's extend the Child Tax Credit at least through the end of 2025."
What is the child tax credit and how is it different from previous years?
At a basic level, the child tax credit is a credit that parents and caregivers can claim to help reduce their tax bill, depending on the number and ages of their dependents. For many, it may provide a much-needed source of relief as part of a 2020 tax year refund.
Previously, the child tax credit was a $2,000 credit parents could claim on their taxes for every child under the age of 17 (the same age range for child dependents that was used for the first and second stimulus checks). And if that credit exceeded the amount of taxes that a family actually owed, parents could still receive up to $1,400 per qualifying dependent as a refund: This is technically referred to as the additional child tax credit or refundable child tax credit. For example, a married couple with children ages 5, 10 and 12 would receive a total credit of $6,000 -- unless they were due a refund, in which case they'd receive $4,200.
IRS child tax credit portal: What's its purpose and when will it launch?
The IRS said it will open a child tax credit portal by July 1 that will let you manage parts of your payment, such as whether you want to receive monthly payments through the end of 2021 or one sum in 2022 when you file your taxes. You will also be able to use the online portal to update the IRS on your family details, such as new qualifying children. The IRS hasn't offered other details about how the portal will work.
See how much your household could get with the advance child tax credit
The new child tax credit could potentially bring your family more money this year, assuming you're eligible. Fortunately, you don't have to do the math yourself to find out how much money you can expect. Using our child tax credit 2021 calculator, you can enter your filing status, adjusted gross income and the number of children you're claiming. Note that the calculator doesn't store any information you input.
When will your first child tax credit check arrive?
The child tax credit comes in two halves. The first half comes in the form of monthly payments. These checks will be split evenly and dispersed monthly starting in July (a specific date has yet to be announced) until December. The second half comes as a tax refund on your 2022 taxes.
What if you just want one large payment?
If for any reason you don't want to receive half your money in 2021, you will be able to opt out of monthly child tax credit payments -- here's how.
How did Biden's stimulus bill change the child tax credit for 2021?
The American Rescue Plan will temporarily give more money to families. Here's everything that changes:
- Credits increase from $2,000 to $3,600 per child under 6 and $3,000 for children older than 6.
- The credit will be fully refundable.
- Money from the credit will be split: Half will be paid monthly from July to December, and the other half will be paid through the tax refund in 2022.
- There is no $2,500 earnings floor.
- Families in Puerto Rico can receive the credit.
Here are more details on money for qualified dependents -- and who counts.
How to find out if your family is eligible for the child tax credit
Families with children under the age of 6 will receive up to $3,600 per child under the new COVID relief bill. Families with kids age 17 and under will receive a credit of $3,000 per child. Families with older kids are also eligible: You can claim $500 for each child age 17 and 18, or for full-time college students between the ages of 19 and 24.
The tax credit applies to children who are considered related to you and reside with you for at least six months out of the year.
Note that though the eligibility requirements are relatively broad, higher-income families may receive a reduced credit. But married couples filing jointly with an adjusted gross income under $400,000 are eligible for the full amount, as are individuals with an AGI under $200,000.
Under the new plan, the amount of the larger credit will start to phase out for single people earning more than $75,000 a year, heads of household earning more than $112,500 a year and married couples earning more than $150,000 a year. Here are more child tax credit eligibility details.
How does it work for babies who are born in 2021?
Bottom line: You'll qualify, as long as you meet the income requirements. Here's what to know about the child tax credit and 2021 babies.
What if you're in a shared custody agreement?
Parents who share custody will not be able to both claim the 2021 child tax credit. Here are more details about a shared custody situation and the child tax credit.
Will the advance child tax credit be based on your 2019 or 2020 taxes?
It will likely depend. The IRS will be tasked with basing your eligibility for the child tax credit on your 2020 tax return, if that's been processed by the first July payment. Otherwise -- in the case of a tax return extension, for example -- the agency would use your 2019 taxes to determine the amount you're owed.
For more information, here's everything in the 2021 stimulus bill, when the stimulus check could arrive and how to calculate how much money you'd get in a third check. Here is also how to track your payment and what we know about using direct deposit to receive your money.
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