Changes in Child Tax Credit – What You Need To Know

Due to the American Rescue Plan Act of 2021, the Child Tax Credit is expanded for just the 2021 tax year.

What does this mean?

  • The credit will increase for many eligible taxpayers.
  • You may receive part of your tax credit before even filing your 2021 tax return.
  • Children who turn 17 in 2021 will be included.
  • This credit is fully refundable, so taxpayers can benefit from the credit even if they don’t earn income or owe any income taxes.

Increase in Child Tax Credit

For the 2021 tax year, those who claim the Child Tax Credit will receive up to $3,000 per qualifying child between the ages of 6 and 17, and $3,600 per child under 6. Keep in mind that the credit will be reduced or nonexistent if you file jointly with an income of $150,000 or have an income of $75,000 as an individual taxpayer.

Advance Child Tax Credit Payments

During the months of July through December, eligible taxpayers who have a main house in the United States for more than half the year will receive advance payments. These payments will total up to 50 percent of the Child Tax Credit. The payments will begin on July 15th and will be directly deposited into your bank account once a month.

A few things to note:

  • If you have not filed your 2020 tax return yet, advance payments will be factored from your 2019 tax return.
  • If you still need to file your 2020 tax return, it is strongly recommended that you file electronically.
  • If you do not wish to receive the advance tax credit, you will have the opportunity to decline the payments.

If you have questions about the this tax credit, don’t hesitate to reach out to us.

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