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Child Tax Credit 2021, AdvCTC Payments

Taxpayers do not need to take further action to receive the monthly advance 2021 Child Tax Credit payments if they have already filed their 2020 return and have their dependent information with the IRS. File a 2020 return as soon as possible or, if you do not normally file, use eFile.com or the IRS AdvCTC Portal - details below.

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Child Tax Credit Advance Payment and Amounts

The advance Child Tax Credit or AdvCTC, as part of the American Rescue Plan Act, is a refundable tax credit. It is an advanced payment of a tax credit you would qualify for on your 2021 tax return due in 2022.

  • The tax credit amounts will increase for many qualifying taxpayers, giving parents or guardians up to $3,600 per child.
  • Unlike the regular Child Tax Credit, there is no 2021 taxable income requirement to be eligible to claim the advance child tax credit. The advance Child Tax Credit for qualifying children is a fully refundable credit. As a U.S. Citizen with a U.S. address for at least half of 2021, you could benefit from the credit even if you do not owe taxes or have earned income.
  • Qualified recipients will have the option to receive monthly direct payments as part of the child tax credit from the IRS during 2021 before filing your 2021 Tax Return in 2022.
  • These advance payments will not be reduced or offset for overdue taxes or other federal/state debts that taxpayers or their spouses owe, but it is not exempt from garnishment. It may, however, be subject to offset for tax debts if/when claimed on the 2021 return as a tax refund.

How to Claim the AdvCTC Advance Child Tax Credit Payments

The only way to claim these advance payments if by filing a 2020 tax return. If you have already filed a 2020 return, you do not have to do anything additional; if you do not normally file, you will have to prepare a simplified version of a 2020 tax return.

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Do I qualify for the AdvCTC?

To qualify for the advance CTC payments, you must:

  • Have a qualifying 2021 tax year qualifying dependent with a Social Security Number that is valid for employment in the United States. Not sure? Use our free dependent calculator,
  • Have lived in the U.S. for more than half of 2021,
  • Possess a valid SSN,
  • Have filed a 2020 or 2019 income tax return (if you have not filed for these years, see below: I do not normally file a tax return),
  • Fall within the income ranges for your filing status:
    • Married filing jointly: up to $150,000
    • Head of household: up to $112,000
    • Single, married filing separately: $75,000
      • Note: these ranges are for your expected 2021 income, NOT 2020 tax returns. The IRS is issuing the payments based on your 2020 income, but the credit amount will ultimately be based on your 2021 income. If you have income above these figures or expect to in 2021, you may still qualify for a reduced portion of the full credit. 
How much will I receive for the AdvCTC?

If you fall into the range above, you will be able to receive up to a total of:

  • $3,600 per child age 0-5 (age as of Dec. 31, 2021) via 6 monthly payments of $300 before claiming the remaining $1,800 on a 2021 tax return.
  • $3,000 per child age 6-17 (age as of Dec. 31, 2021) via 6 monthly payments of $250 before claiming the remaining $1,500 on a 2021 tax return.
  • If your income is above the threshold, you may receive a reduced, calculated portion of these amounts. If it is above the phaseout threshold, then you may qualify for the regular Child Tax Credit which is not eligible for advance payments.
I have not filed a 2020 tax return

If you are generally required to file a tax return and have not done so, file your 2020 tax return now so the IRS can issue the advance CTC payments. Once this is done, you do not have to take further action to receive these payments. Filing a 2020 tax extension will not give the IRS the information to issue the payments!

My dependent was claimed on a 2020 return

Will someone receive your due Child Tax Credit payments? The IRS will issue the payments based on this return, so they would receive the payments starting in July. However, there are some situations to consider; since these are advance payments of the 2021 return, the payments would have to be repaid if wrongfully claimed. In this situation, whoever claimed the dependent will want to opt out or unenroll on the IRS portal so they do not have to repay this. Consider these scenarios:

  • I know who claimed my dependent: they will want to opt out of the payments (via the tool see below: IRS Child Tax Credit Portal) so they do not wrongfully receive them. If they do so, you will be able to update this on your end on the IRS portal. Input your 2021 information so the IRS can issue these payments. If they do not unenroll, please follow these instructions. Alternatively, both parties can make the necessary or correct advanced child tax credit adjustment on the respective 2021 tax returns in 2022.
  • I do not know who claimed my dependent or they will not cooperate: you may be able to update your information on the IRS portal, however, it may be rejected by the IRS since their records will show that they are already issuing credit for the person who claimed them. If this is the case, you would have to file a 2021 return as soon as it is available and claim your dependents. Doing this will give you a lump sum of the tax credit - whoever claimed the credit wrongly will owe it back.
  • My ex-spouse and I alternate years - who gets the credit? If you did not claim your dependent on the 2020 return, but it is your year to claim on the 2021 return, you are the spouse who should receive the credit. The spouse who claimed the dependent for 2020 will want to unenroll on the IRS tool (via the tool see below: IRS Child Tax Credit Portal) and you will want to add your dependent and claim them on your 2021 tax return due in 2022. If the spouse does not opt out, see the link below. Alternatively, both parties can make the necessary child tax credit adjustment on the respective 2021 tax returns in 2022. For example, if a spouse received the 2021 advanced child tax credit incorrectly, that spouse would not claim the dependent in question on the 2021 tax return, while the other spouse would claim that dependent and enter 0 (number zero) as advanced child tax credit payment.
  • Learn more here on how to address wrongfully claimed dependents on a tax return or if a spouse is not cooperative on this matter.
I have filed a 2020 return

If you have already filed a 2020 return, you do not have to do anything to begin receiving these payments. You can expect a letter in June, July 2021. The IRS will issue these based on your 2020 information, but they are estimated based on your 2021 return. Because of this, if you expect your situation to change in 2021, you will have to update this via the IRS Child Tax Credit Update Portal (IRS CTC UP). Find details on the IRS tools below. Alternatively, you can make adjustments (e.g. add a dependent born during 2021, remove a dependent) when you prepare and eFile your 2021 tax return in 2022.

I do not normally file a tax return

If you do not file a tax return each year - your only income is SSI, you do not have taxable income, etc. - then you may need to take action. As someone who does not normally file - the term non-filer has been used - here are two options:

  • Option 1: Start a free return on eFile.com. We will help you file a non-filer, simplified return. This will get your income and dependent information to the IRS so they can issue the advance CTC payments, the third stimulus, and you will also be able to claim the first and second stimulus payments if you did not receive them.
  • Option 2: Use the IRS CTC portal or Free Fillable Forms page. This IRS tool allows you to fill in a simplified return and get your information to the IRS so they can issue the above payments. Important: Do NOT use this tool if you are required to file a 2020 tax return, as this tool will count as a tax return. If you subsequently filed a regular return, it would get rejected and you would have to file a tax amendment: IRS Non-filer Sign-up Tool

The IRS has stated that those whose only income is different benefits, such as Social Security Income, Railroad Retirement Benefits, etc., should have their information used to issue these payments if they qualify. However, it is encouraged that recipients use the IRS portal to be sure their information is up-to-date.

Advanced Child Tax Credit case study, example: A married couple filing jointly has a total income of $90,000 and will claim two children, ages 6 and 10 as of December 31, 2021. They are eligible to receive a total of $6,000 composed of $3,000 per child dependent. They have already filed their 2020 return and claimed these dependents, thus the IRS will use this to automatically issue advance payments of this amount each month using the direct deposit information submitted on the return. The advance payments are half of the total, so the couple will receive $500 ($250 per dependent) each month until December. In 2022, they will file their 2021 return, report the amount they received, and claim the remaining half of their tax credit, $3,000. Throughout 2021, they received $3,000 and will claim the other half on their tax return.

IRS Child Tax Credit Portals

The IRS will be either be launching two separate CTC tools or will be updating the current non-filer tool to include both of the functions in the table below. The tool(s) will be used to file a simplified return and/or to update your tax information that would affect your credit amount.

IRS Tool
Description
Non-filer, Free Fillable Forms

Enter your name, social security number, and other identifying information. On the forms, report your dependents, any income, and e-file your return to the IRS. They will then use this to issue the advance 2021 CTC payments. They will likely create a similar tool in 2021 for non-filers to create and e-file a simplified 2021 return in order to claim the second half of the credit. Alternatively, you can e-File a simplified income tax return on eFile.com in 2021 and 2022.

IRS Non-Filer Sign-Up Tool

CTC Update Portal

The IRS has confirmed that taxpayers who have filed a 2020 return will use the portal to update their information, track their payments, and opt out of receiving the advance payments. The following can be updated:

  • Mailing address,
  • Direct deposit information (if your 2020 tax refund was mailed to you, you may be able to provide direct deposit information on the portal in order to receive these payments directly to your bank),
  • Changes in dependents, such as removing a dependent or adding a newborn child in 2021,
  • Marital status,
  • Re-enroll if previously unenrolled, and,
  • Change in income (to avoid an overpayment of the credit, which would have to be paid back in 2022).

To sign up and edit information, you will need an IRS account or an ID.me account.

IRS CTC Update Portal

If you are not sure if a child qualifies as your dependent on your 2020 or 2021 tax return, use this Dependent Calculator to find out. See information on what to do when your dependent was claimed incorrectly by another taxpayer e.g. in joint or shared custody situations. Prepare your 2020 and 2021 tax returns on eFile.com and we will help you not only claim your dependent, but get the most out of the enhanced Child Tax Credit if you qualify for it.

Important: the IRS will not initiate contact via email, text message, or social media. Do not respond to any inquiries claiming to be the IRS requesting information regarding the advance Child Tax Credit payments.

Child Tax Credit Advance Payment and Amounts

The IRS announced on June 7, 2021 that they have begun issuing letters to taxpayers who may be eligible. Recipients may see IRS Letter 6416-A or 6416-B come in the mail, followed by IRS Letter 6147, a second letter closer to July detailing their monthly payments. IRS Letter 6419 will show the full amount which will be used on the 2021 tax return, sent around January 2022.

Common questions relating to the new, enhanced child tax credit:

  • When will I receive my Child Tax Credit checks?
  • Can I get money for my kids or dependents older than 17?
  • How am I going to receive my Child Tax Credit payments?
  • Do I need to file an income tax return to receive the Child Tax Credit?
  • Does my newborn baby count for the Child Tax Credit?
  • Can I get the Child Tax Credit for dependent claimed by an ex-spouse?
  • How long do the CTC checks last?
  • Do I have to repay the amount I receive if I get too much?

The IRS is setting up to pay this credit in advance. That is, through monthly payments of potentially $300 for a child under 6 years old and $250 for all qualifying dependents ages 6-17. Parents who claim dependents and qualify for this will be able to receive half of the enhanced Child Tax Credit during the 2021 tax year before claiming the remaining half on their 2021 tax return. There are some guidelines for who can claim the credit as not everyone will be eligible:

  • Families might be eligible to receive, for each dependent, a total child tax credit payment of $3,600 for each child claimed under the age of 6. These will be monthly payments issued either via direct deposit or mail on the fifteenth of each month, July 15 - December 15, 2021. The payment for each child or dependent between the age 6 and 17 is $3,000. This enhanced portion of the CTC will be available for single or married filing separate parents with a 2020 tax return AGI (adjusted gross income) of up to $75,000. Those filing head of household can have an AGI up to $112,500. For parents with the filing status married filing jointly, the income limit is an AGI of $150,000 on the 2020 tax return. Learn more about your IRS filing status. These are phaseout periods; for any amount over the limit, 5% of the credit is reduced, or five dollars for every hundred. Note: if your AGI does not qualify you for the credit, you can still claim the normal Child Tax Credit with the higher AGI limits.
  • The child age is based on their age at the end of the tax year - for Tax Year 2021, that would be as of December 31, 2021. For example, if a 5 year old child turns 6 during 2021 (as of December 31, 2021), that dependent would fall into the age 6-17 bracket. If a 17 year old dependent turns 18 during 2021, then they would not be eligible for the advance tax credit.
  • You will qualify for full repayment protection if your 2021 income falls under the following AGI limits: $60,000 for married filing joint, $50,000 for head of household, and $40,000 for single. This means that, if your income is below these, you will be fully protected from paying back any excess advance payments of the CTC. This protection phases out until your income reaches the the limits from the first bullet point.
    • For example, you are a single taxpayer who made $30,000 during 2021 and had claimed two qualifying dependent children on your 2020 tax return. You were given advance payments based on these, but you are only going to claim one qualifying child on your 2021 return. Because your income is below the limit, you will be fully protected from repaying this when you file your 2021 return by receiving up to $2,000 in repayment protection.
  • Unlike the traditional child tax credit, which might be partially refundable, the enhanced credit is fully refundable and no longer requires earned income of $2,500. If you do not normally file (i.e. you normally do not have enough earned income), you may be eligible to claim these payments through a tax return or the future CTC portal.
  • Dependents with the age of 18 might qualify for up to $500 of child tax credit. Children or dependents between the ages of 19 and 24 who attend college full-time might also qualify for up to $500 per dependent.
  • If a child was born during 2021 as a qualifying dependent and they have not been reported to the IRS by July 2021, a taxpayer has the following two options for receiving the enhanced child tax credit payment:
    • Option A: A taxpayer could use the IRS portal - scheduled to open by July 1, 2021 - and register the 2021 newly born child as a dependent. We do not have all the details on this, so bookmark this page as it will be updated as the information becomes available. See below for more details.
    • Option B: You could claim the enhanced child tax credit on your 2021 tax return due in 2022 and receive the Child Tax Credit or CTC in a lump sum via your tax refund or reduce your taxes owed. Option B would not enable you to receive monthly payments starting in July 2021; for that, you would have to use Option A.
  • If a child passes away during 2021, the parent or taxpayer who claimed them on the tax return is still eligible to claim the advance payments. If the qualifying child was alive during 2021 and was eligible to be claimed on your return, you can claim the advance payments of the credit for 2021.
  • The IRS is basing the payments off your 2020 return - if a 2020 return is not available, they will use a 2019 return or a "non-filer return" if available. If you file your 2020 return late - as in, after the payments have begun in July - and doing so changes your payment amount, the IRS will adjust this for the remaining payments.
  • If you have filed or e-filed a tax extension which has been accepted, this will delay getting your information to the IRS. The IRS will use your last available return information - potentially 2019 - to issue your payments if you do not update your extension with your income tax return or use the IRS CTC portal when it launches.
  • A dependent can only be claimed once per year, meaning, in the case of separated parents or guardians, only one taxpayer may claim the credit. The dependent must be claimed by the taxpayer who is eligible to claim; if wrongly claimed, the amount may have to be repaid. In general, if you receive an overpayment of the credit (for example, your income changes and you qualify for less than you received) then you will have to repay this via a 2021 tax return. Be as accurate as possible if reporting your information on the IRS portal. If you did not claim a dependent on the 2020 return, you may be able to add the information on the CTC UP to indicate you will be claiming them on the 2021 return.
  • You will be able to change your method of payment for the enhanced child tax credit payments via the IRS child tax credit portal. See below for more information. The enhanced child tax credit payments are only set to last through 2021, but President Biden has suggested that this may be extended through as long as 2025 as part of the American Families Plan.

IRS Child Tax Credit Portal and Non-filers

The advance Child Tax Credit or CTC payments are scheduled to begin in July 2021 and end by 2022. It is unclear if it will be extended into 2022 and/or future years.

The Internal Revenue Service has launched a site where taxpayers can update their information, non-filers can enroll, and all users can track the enhanced child tax credit. The CTC payments will be made monthly and not in one lump sum payment - though taxpayers can unenroll and receive just one payment. Taxpayers can use the IRS portal to indicate to the IRS that they wish to opt out or report any changes to their households in 2021. Families without internet service can use a paper form or visit an IRS office.

Since not all families have sufficient income to require filing a tax return, the IRS has suggested that parents or guardians who do not normally file (e.g. did not file a 2019 and/or 2020 tax return) will be able to simply create an account via the IRS portal and get their credit that way. The IRS portal will also let non-filers and taxpayers who did file update their children’s custody or dependent claim arrangements - for example, if children have moved since last reported on a tax return or to add newborn babies since the last of any filed tax return.

With this method, a tax return is not needed and the information will still go directly to the IRS so they can begin issuing these payments. If you are a non-filer who is looking to claim this credit, consider using the portal OR filing a 2020 tax return via eFile.com in order to get your tax information, bank information, dependent data, etc. to the IRS now.

Important: The IRS has created the Child Tax Credit Update Portal or CTC UP which will go through two phases. First, it will be used for taxpayers to opt out/unenroll in the advance payment program. Later, it will be updated with tools for users to get a status of their payments, update their information, and it will also be available in Spanish. Parents or guardians will be able to update their mailing address, banking information, dependent information, marital changes, or a change in income. The page is also where those who do not normally file can get their information to the IRS.

Why would I want to opt out of the advance Child Tax Credit Payments? You may want to not claim these advance payments for a few reasons. Some taxpayers simply like a large check at the end of the year; instead of using the money during the year, take a big check in early 2022 after filing your 2021 return and pay off your debt in a large sum or put a down payment on a new car. Additionally, if you expect your income to increase in 2021 - if you start receiving payments now, but your new income puts you above the phase-out threshold - you may have to pay this back. If you expect your dependent to be claimed on the 2021 return - maybe by an ex spouse as part of a divorce agreement and you alternate years - then you would want to unenroll if you claimed your dependent this year. You would want to opt out if you no longer live in the U.S. for more than half of 2021. If you reported a U.S. address on your 2020 return, you will want to opt out if you anticipate establishing a foreign residency in 2021.

The unenrollment date is at lest three days before the month of the next payment. If you want or need to unenroll for all the payments, you will want to do so by July 28, 2021, since the first payment is in July. If you are late, you will receive the payment and any additional ones until you unenroll - this process may take up to seven business days.

In summary, make sure your 2020 tax return is filed or e-Filed with the IRS as soon as possible. You can e-File your 2020 tax return(s) until October 15, 2021 here at eFile.com. After then, they will only be able to be filed by mail. Get your information to the IRS so you can start receiving your due payments. You will be able to re-enroll in late September, 2021. 

If you who do not used the IRS portal to claim your advance Child Tax Credit benefits, you can claim the credit when you prepare and e-File your 2021 tax return in 2022 here on eFile.com.

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