The IRS announced that eligible families would automatically begin receiving monthly child tax credit (CTC) payments starting July 15. These payments cover half of the credit families will likely qualify to receive when they file their 2021 federal income tax return. Each payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 to 17. The IRS will issue advance CTC payments on July 15, August 13, September 15, October 15, November 15, and December 15.
Eligible families would have:
- filed either a 2019 or 2020 federal income tax return;
- used the Non-Filers tool to register for an economic impact payment (EIP) during 2020; and
- already registered for the advance CTC using the Non-filer Sign-up Tool.
Taxpayers unsure of their eligibility can:
- check qualification using the CTC Eligibility Assistant;
- register with the IRS using the Non-filer Sign-up Tool. Alternatively, file a return with the IRS; and/or
- check status of their monthly payments and update information using the CTC Update Portal.
The American Rescue Plan (ARP) ( P.L. 117-2) raised the maximum CTC in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for children between ages 6 and 17. Before 2021, the credit was worth up to $2,000 per eligible child.
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. 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 $1,000 in modified AGI.
The credit is fully refundable for 2021. This means eligible families can avail themselves of it even if they owe no federal income tax. Before 2021, the refundable portion was limited to $1,400 per child. More information can be found at https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.