Published on July 13, 2021
Advance Child Tax Credit Payments Begin This Month
If you’re the parent of a child or children under the age of 18, you just might find some extra cash in your account in the coming weeks, as Advance Child Tax Credit Payments will begin July 15.
Payments will come in monthly installments; the amount will depend on how many children you claim and their ages.
The early tax credit payouts are part of the American Rescue Plan that was signed into law in March and provides advance payments of the Child Tax Credit.
What exactly is the Advanced Child Credit?
According to an FAQ on the IRS website:
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 properly 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.
How you qualify
In most cases, parents who filed a tax return in 2020 will automatically receive the payments. However, according to the IRS, "You must take action if you have not filed your 2020 tax return or 2019 tax return. The IRS has unveiled an online Non-Filer tool that will allow individuals who weren’t required to file (and have not filed) a tax return for 2020 to file a simplified tax return. This simplified tax return will allow eligible individuals to register for advance Child Tax Credit payments and the third Economic Impact Payment, as well as claim the 2020 Recovery Rebate Credit."
For complete information on qualifying for the advanced tax credit, click here.
The child tax credit has increased
For tax year 2021, the Child Tax Credit is increased from $2,000 per qualifying child to:
$3,600 for children ages 5 and under at the end of 2021.
$3,000 for children ages 6 through 17 at the end of 2021.
This amount reduces to $2,000 as your income increases. For more on these calculations, click here.
How much will you receive:
Your total advance Child Tax Credit payment amounts will equal half of the amount of your estimated 2021 Child Tax Credit. This amount is then divided into monthly advance payments to you.
As a result: For each of your qualifying children age 5 or younger, generally you will receive $300. That is determined by dividing $3,600 in half, which is $1,800. Six monthly payments of $300 = $1,800.
For each of your qualifying children ages 6 to 17, generally you will receive $250. That is determined by dividing $3,000 in half, which is $1,500. Six monthly payments of $250 = $1,500.
You can decline the early payments
If you would rather wait and claim your tax credits at year’s end, you can unenroll through the Child Tax Credit Update Portal (CTC UP) before the first advance Child Tax Credit payment is made.
For more information on all that is involved in the early tax credit payments, see the IRS website.