The Child Tax Credit 2021
The Child Tax credit of 2021 is almost here. How do you feel about it? Do you desperately need it or would you like to reduce or stop the payments? The advance Child Tax Credits of 2021 will be distributed monthly to eligible families, beginning on July 15. Here’s what you need to know about these payments.
What are the changes to the Child Tax Credits for 2021?
The Child Tax Credit (CTC) for 2021 will be significantly expanded:
- Eligible families will get $3,000 per qualifying child between ages 6 and 17 at the end of 2021.
- Eligible families will get $3,600 per qualifying child under age 6 at the end of 2021.
- The credit is fully refundable.
- Advance payments of up to 50% of the total CTC per family will start once a month, July 15 -Dec. 15, 2021.
Who’s eligible for the Child Tax Credits?
Taxpayers who have a primary residence in the U.S. and live in it at least half of the year are eligible for the child tax credits.
Payments will begin to be phased out for married taxpayers filing a joint return who earn more than $150,000 a year, heads of household earning more than $112,500 a year, and all other taxpayers earning more than $75,000 a year. The base income eligibility is on the 2020’s tax return.
How much will I receive per month through the advance Child Tax Credits?
The advance payments going to qualifying families are equal to 50% of each family’s total CTC. They will base payments upon the income information found in taxpayers’ 2020 tax returns or, if these are not yet filed, in the 2019 tax returns.
Families eligible for the full CTC will receive half of the total across six months. From July to December, eligible families will receive $300 a month per child under age 6 and $250 a month per child ages 6-17.
Can I decline the advance payments of the 2021 Child Tax Credits?
Eligible taxpayers who do not want advance payments of the 2021 Child Tax Credit can choose not to receive them. This choice may apply to taxpayers who anticipate earning more in 2021 than in 2020 or who have primary custody of the child(ren) receiving the credit in 2020, but not in 2021. The IRS has not yet provided instructions for declining the advanced payments officially but has promised to update irs.com’s website when available.
Now you know a little more about the child tax credit 2021. The advance CTC payments will be a boon for families struggling with the financial fallout of the pandemic, but it may not be in every taxpayer’s best interest to accept these payments now. Use our guide to brush up on the details of these payments so you can make an informed decision. If you like this post, check out our MoneySmart Tips blog.
