Parents, mark July 15 on your calendar. If you are qualified for the expandedthat were part of the latest stimulus bill, this is when your family will automatically receive your first advance payment, with monthly checks for half the total amount continuing through 2021. However, as is usually the case with anything tax-related, the child tax credit rules can get complicated. We can help.
To get the payments, your family needs to bring in less than a certain amount of income, and yourrequirements. The newly increased 2021 payments are for up to $300 a month per child, or over the course of this year and next. That includes . Another key thing to know: The advance , so parents can choose instead to receive the when they file their taxes in 2022.
According to a White House fact sheet, the American Families Plan might extend the new child tax credit in the future. We’ll keep you informed. Here’s what’s happening with a potential , what to do if you haven’t received your , and . This story was updated.
Families will get up to $3,600 for each child under age 6
If your dependents are below the age of 6, you can claim up to $3,600 per child as long as you meet the income requirements, which are listed below. That’s $1,600 more than the $2,000 that parents were able to claim on their 2020 tax returns.
This includes, even if they’re born later in 2021. Before next month, parents will be able to update the IRS with their new dependent information in an in order to begin receiving the advance payments this year. Otherwise, parents can file a claim on their 2021 tax return next year.
2021 Child Tax Credit Age Brackets
|Ages 5 and younger||Up to $3,600 each child, with half of credit as $300 monthly payments|
|Ages 6 to 17||Up to $3,000 each child, with half credit as $250 monthly payments|
|Age 18||$500 one-time check in 2022|
|Ages 19 to 24, full-time college students||$500 one-time check in 2022|
Families will get up to $3,000 for each child between ages 6 and 17
If your dependents are age 6 or older, you’ll qualify for up to $3,000 per kid over the next year, assuming again that you meet the income requirements. This includes your dependents who are 17 years old. In prior years, parents could only claim up to $2,000 for each dependent age 16 and younger.
You can also get money for your older kids, although it’s not nearly as much. You can claim up to $500 for an 18-year-old, as well as for full-time college students ages 19 to 24.
Individuals who make $75,000 or less (or couples who make $150,000 or less) will get the full amount
As long as your, or AGI, is $75,000 or less, single taxpayer parents will qualify for the full child tax credit amount. After $75,000, the amount begins phasing out. At $240,000, single filers phase out of the tax credit entirely.
If you’re married and filing jointly with your spouse, your AGI needs to be $150,000 or less to qualify for the full child tax credit amount. At $440,000, couples will phase out of the tax credit entirely.
The credit phases out by $50 for every $1,000 of income over the threshold amounts for all filers, according to Joanna Powell, managing director at CBIZ.
2021 Child Tax Credit Income Limits
|Who qualifies||What the law says|
|Single filer||An AGI of $75,000 or less to qualify for the full amount|
|Head of household||An AGI of $112,500 or less to qualify for the full amount|
|Couple filing jointly||An AGI of $150,000 or less to qualify for the full amount|
|Nonfiler||Will need to file a 2020 tax return to get the payment|
Heads of household who make $112,500 or less are qualified for the total amount
As a head of household, your AGI will need to be $112,500 or less to qualify for the full child tax credit amount. The amount you could get begins phasing out if your income is over that amount, and by $240,000 you phase out of the tax credit.
Parents who don’t typically file their taxes may qualify, but…
Even if you don’t usually file taxes —— you’ll need to file a return to qualify for the 2021 child tax credit. Payments will be automatic for those who filed their 2020 tax returns by May 17, so if you didn’t have your tax return submitted by this time, the IRS won’t know to send you a payment.
By July 1, the IRS will open. One of the portals will be crucial for households that don’t traditionally file income taxes so they can register their information. Households that have gained new dependents since filing taxes should update their information in the portal to make sure they get the amount they’re due.
More eligibility rules for the new child tax credit checks
- The child you’re claiming must live with you for at least six months out of the year.
- You and your child must be US citizens, unlike mixed-status households.
- For married couples filing jointly, at least one spouse needs to have a Social Security number or an ITIN.
- The child must also have a Social Security number — a child with only an ATIN won’t qualify. (This includes adopted children.)
- cannot both receive the tax credit.
Here’s what else to know.
Important: The results here are based on our current knowledge of the law, but should be treated as broad estimates only. Consult a financial planner for a more personalized estimate.