What You Need to Know About the Child Tax Credit

Author: Brandon Gilley, Branch Manager 07/09/2021

On July 15, millions of American families will receive the first of six monthly payments of up to $300 per child from the federal government. It’s all part of the 2021 Child Tax Credit, which Congress extended back in March as part of the American Rescue Plan Act of 2021.

While many families won’t have to do anything to start receiving these payments, there are important pieces of information you should know about the child tax credit and what makes your family eligible.

What Are Advance Child Tax Credit Payments?

According to the IRS, Advance Child Tax Credit payments are early payments from the IRS of 50 percent of the estimated amount of the Child Tax Credit that you may claim on your 2021 tax return during the 2022 tax filing season.

If the IRS has processed your 2020 tax return or 2019 tax return, these monthly payments will be made starting in July and through December 2021, based on the information contained in that return.

Who is Eligible for the Credit?

While we encourage you to check your eligibility using the eligibility assistant tool, here are a few key eligibility requirements in order to receive payments:

  • A qualifying child must not turn 18 years old before January 1, 2022.
  • The qualifying child must be a taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister or a descendant of any of them (grandchild, niece or nephew, for example).
  • The qualifying child must not provide more than one-half of his or her own support in 2021.
  • The qualifying child lives with the taxpayer for more than half the 2021 tax year, with some exceptions.
  • The qualifying child must also be claimed as a taxpayer’s dependent.

To earn the full credit amount, your income must be under $75,000 as a single filer, under $150,000 as a married couple filing a joint tax return, and under $112,500 for “head of household” filers. The credit is reduced for those earning above those amounts. Unmarried taxpayers who earn at least $240,000 and $440,000 for married couples will not receive a credit.

You or your spouse, if married filing a joint return, must also have your main home in one of the 50 states or the District of Columbia for more than half the year to be eligible for payments.

How Much is the Tax Credit for 2021?

Families will receive a total credit of $3,600 for each child under age 6 ($300 per month). For children ages 6-17, families will receive a total credit of $3,000 for each child ($250 per month.)

As part of the 2021 Advanced Child Tax Credit, eligible families can still receive the full credit even if they do not have earned income or owe any federal income tax.

When Will the Payments Begin?

The IRS will begin disbursing payments on July 15 and will continue on the 15th of every month through December 2021. In August, the payment will come on the 13th, as the 15th is on a weekend.

If the IRS has received your banking information through your 2020 tax return, 2019 tax return, or through information you entered into the Non-filer tool in 2020, you will receive your payment through direct deposit. If the IRS does not have your banking information, you will receive your payment by mail.

Can You Opt Out of the Payments?

Yes. You can choose to not receive Advance Child Tax Credit payments by unenrolling on the IRS Child Tax Credit Update Portal three days before the first Thursday of the next month. The upcoming unenrollment deadlines are August 2, August 30, October 4, November 1, and November 29.

Watch Out for Child Tax Credit Scams

It’s important to be vigilant. You should only be receiving money by either filing a tax return with the IRS or registering on the IRS portals on IRS.gov. All other options are scams. The IRS will never ask you for your personal information or make threatening messages by phone, email, text, or social media. If someone demands tax payments on gift cards, that is a scam. If you receive unsolicited emails, texts or social media messages that claim to be from the IRS, notify the IRS at phishing@irs.gov.

For more answers to frequently asked questions regarding the Child Tax Credit, visit the IRS website.

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