Hot off the press - the Child Tax Credit 2021 is already being distributed to people who qualify! Those who are eligible will receive monthly payments of between $250 and $300 from July 2021 to December 2021, corresponding to half of the total amount of the credit. The other half of the Child Tax Credit can be claimed next year when you file your tax return. Read on to find out if you qualify, how to get access to the payments and what the limitations are.
What Is The 2021 Child Tax Credit?
The Child Tax Credit is a credit that can be claimed each year as part of your tax deductions when submitting your tax return. The credit has been around since 1997. In fact, if you claimed the Child Tax Credit on your most recent tax return, the Internal Revenue Service (IRS) will automatically enroll you in this program.
What makes it different this year is that as part of the United States Rescue Plan that President Biden signed in March, the IRS was authorized to advance half of the credit and deliver monthly checks to qualifying families. In addition, they expanded the amount of the credit and the eligible age limit.
This means that between July 2021 and December 2021, half of the total amount of the credit will be distributed with monthly payments, deposited by direct deposit, checks or debit cards (based on your preference).
How Much Can You Expect From The Child Tax Credit 2021?
This year, the age limit was increased to 17 and the amount increased from $2,000 to the amounts shown below:
- Up to $ 3,600 for each eligible child under age 6.
- Up to $ 3,000 for each eligible child, ages 6 to 17.
What Are The Requirements?
- Having claimed the Child Tax Credit on your most recent tax return - either 2019 or 2020.
- Provided your bank information or other preferred payment method to the IRS.
- Lived primarily in the US and spent more than 6 months a year in the country. You can also file a joint return with a spouse who meets this requirement.
How To Receive The 2021 Tax Credit
The good news is that if you claimed the Child Tax Credit on your most recent tax return, the IRS will automatically enroll you in this program to receive your advanced monthly payments.
If you haven't filed your taxes yet, don't worry! We invite you to file your return with the IRS as soon as possible so they have your most recent and accurate information. They can then determine whether you're eligible for the 2021 Child Tax Credit and set up payments if you are.
Additionally, the IRS launched two new online tools to help families manage their Child Tax Credit advance payments. The first is a tool that helps you determine your eligibility, and the second is a tool that helps families choose when to receive the payments (monthly, or as one lump sum at the end of the year).
Who is eligible for the 2021 Child Tax Credit?
If you want to know if you qualify, check out this online tool which features questions from the IRS verifying your eligibility. Note that when completing their verification process the IRS will still rely on information provided in your federal income tax return for the years 2019 or 2020.
What is the maximum income to qualify for the 2021 Child Tax Credit?
In order to qualify the father and/or mother must meet one of the following conditions:
- Filer earns less than $75,000 per year if they file alone.
- Filers earns less than $150,000 if they file jointly as a married couple.
- Filers who identify themselves as “head of household,” earning less than $112,500 per year (eg, unmarried families with only one parent).
Those who earn an income greater than the amounts listed above will have a reduced credit of $50 for every $1,000 that exceeds the maximum. This continues until the credit reaches $2,000, wherein the reduction stops.
When Will We Receive The 2021 Tax Credit?
Monthly payments began July 15, 2021, and will continue on a monthly basis. Here are the exact dates provided by the IRS:
- July 15
- August 13
- September 15
- October 15th
- November 15
- December 15
Keep in mind that if you take advantage of this government benefit this year, then the next year your refund may be reduced as this program represents an advance. Remember that you have the option of deciding whether or not you’d like to receive the payments now, or wait to receive the full amount next year.