Advanced Payments of the Child Tax Credit and What to Do
Table of Contents:
- Extensions to the 2021 Child Tax Credit plan
- Criteria to qualify for advanced payments
- Maximum Credit Available
- How to unenroll from getting advanced payments
- Important Questions Regarding the Child Tax Credit Plan in 2021
If you are looking for information about the 2021 Child Tax Credit (CTC) plan, you have come to the right place. This article will go into detail about the expanded Child Tax Credit, and what you need to do in order to get it!
The American Rescue Plan that was signed into law in March 2021 by the Biden Administration, made important changes to the Child Tax Credit plan for most taxpayers this year.
These changes include a credit amount increase for many qualifying taxpayers, and taxpayers that qualify can benefit from the credit even if they do not owe any income taxes this year.
The IRS will make advanced monthly payments of half the estimated annual Child Tax Credit per child based on the requirements of the American Rescue Plan. These payments will be distributed from July 15th through the end of the year. The other half of the Child Tax Credit is to be claimed when you file your 2021 income tax return. These changes apply to tax year 2021 only.
The maximum annual Child Tax Credit will be $3,000 per qualifying child between the ages of 6 and 17, and $3,600 per qualifying child under age 6, at the end of 2021.
To qualify for advance Child Tax Credit payments, you must meet the following criteria:
- Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return or have provided the IRS your information in 2020 to receive the Economic Impact Payment using the non-Filers payment info tool on the IRS.gov website.
- Your primary residence is in the United States for more than half the year, or you file a joint return with a spouse who has a primary residence in the United States for more than half the year.
- The qualifying child must live with you for at least half of the year.
- A qualifying child must be under age 18 at the end of 2021 and have a valid Social Security number and earn less than certain income limits.
The maximum credit is available to taxpayers with a modified Adjusted Gross Income of:
- $75,000 or less for single taxpayers,
- $112,500 or less for head of household,
- $150,000 or less for married couples filing a joint return and qualifying widow(er)s and
- the maximum credit phases out for higher income taxpayers.
How to unenroll from getting advanced payments.
If you prefer not to receive monthly advance Child Tax Credit payments because you would rather claim the full credit when you file your 2021 tax return, or you know you will not be eligible for the Child Tax Credit for your 2021 tax year, you will be able to unenroll through the Child Tax Credit Update Portal (CTC UP) at https://www.irs.gov/credits-deductions/child-tax-credit-update-portal and follow the steps.
Important Questions Regarding the Child Tax Credit Plan in 2021
- What are advanced child tax credit payments?
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 claim on your 2021 tax return during the 2022 tax filing season.
If your 2019 or 2020 tax return have been processed, these monthly payments will be distributed starting July 15th and run through December 2021, based on the information included in your tax returns.
- What do I need to do to receive advanced Child Tax Credit payments?
If you have not filed your 2020 or 2019 tax return you must use the 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.
Otherwise, if you are eligible to receive advance Child Tax Credit payments based on your 2020 tax return or 2019 tax return you should receive those payments automatically without needing to take any additional action.
- Did the requirements for qualifications change for the Child Tax Credit for 2021?
Yes. Please check to see how the changes affect you.
- Do I, or my children, need to have a social security number to qualify for Child Tax Credits?
You, and if you are married and filing a joint return, your spouse must have a Social Security number (SSN) or an IRS Individual Taxpayer Identification Number (ITIN).
You will receive advance Child Tax Credit payments only if you used your correct SSN or ITIN when you filed a 2020 tax return or 2019 tax return (including when you entered information into the Non-Filer tool on IRS.gov in 2020).
Advance Child Tax Credit payments will be made for each qualifying child who has an SSN that is valid for employment in the United States.
- In 2019 I did not qualify for and did not receive the Child Tax Credit but based on my 2020 information I am eligible. What can I do to receive advanced payments in 2021?
File your 2020 tax return. Even though you did not receive the Child Tax Credit based on your 2019 tax return, you may receive advance Child Tax Credit payments based on the number of qualifying children allowed on your 2020 tax return. The payment will start in July or the month after your 2020 tax return is processed, whichever is later.
- What does pending eligibility mean in the Child Tax Credit portal?
The IRS is still reviewing your account for eligibility. You can continue to check back for status updates in the Child Tax Credit Update Portal or contact us at Franskoviak Tax Solutions for help.
- Can I still get payments under pending eligibility?
No. You will not receive advance CTC payments until they are able to confirm your eligibility. If they cannot confirm eligibility during 2021, you may be eligible to claim the full 2021 Child Tax Credit when you file your 2021 tax return.
- My payment was issued but I did not receive it, what should I do?
You can request a payment trace to track your payment if you have not received it within the timeframes listed below. We will not be able to trace your payment unless it has been:
- 5 days since the deposit date and the bank says it has not received the payment.
- 4 weeks since the payment was mailed by check to a standard address.
- 6 weeks since the payment was mailed, and you have a forwarding address on file with the local post office.
- 9 weeks since the payment was mailed, and you have a foreign address.
To start a payment trace, mail or fax a completed Form 3911, Taxpayer Statement Regarding Refund PDF.