The 2021 enhanced Child Tax Credit

This is for tax year 2021 only and how to claim the 2021 Child Tax Credit? Will there ever be an enhanced Child Tax Credit in 2022, 2023?

You can only claim the enhanced Child Tax Credit (CTC) by filing a 2021 Return on paper since the e-file deadline has passed. To claim it, follow these steps:

  1. Open the 2021 IRS Form 1040.
  2. Enter your personal details, including name, address, and filing status.
  3. Enter your dependent information; for dependents eligible for the Child Tax Credit, check the box next to each dependent.
  4. Open the 2021 IRS Schedule 8812 and follow each line, filling in the applicable sections.
  5. Take the total refundable CTC and enter it on the Form 1040, Line 28.
  6. Add this to all your tax credits, including the Recovery Rebate Credit for Stimulus 3 from Line 30, and enter the total on Line 32.
  7. Continue through the remaining lines and sign the form.
  8. Mail in your 2021 Return to the IRS.

You can provide a bank account on your Form 1040 for direct deposit. You can e-file your current year return via regardless of when you mail your 2021 Return - start free hereYou can only claim the refundable 2021 CTC on a 2021 Return.

Will the Enhanced CTC Be Revived?

The 2021 Child Tax Credit was the only version of the CTC to ever be fully refundable, regardless of income. The government has proposed multiple plans to bring back the credit, but nothing has ever been signed. We will keep these instructions incase this is ever brought back so the credit can be claimed by e-filing a return.

The following instructions are archived and may not be relevant for current or future tax returns.

Sign up or sign in and begin entering your information. If you have taxable income, this needs to be reported as the return is not to be solely used to claim the CTC unless you have no taxable income. We recommend simply working through the tax interview as this will walk you through every section and assure you do not miss anything. However, see below for how to add this information manually.

Add your dependents under Federal Taxes > Dependents and include all applicable information (names and SSNs, childcare, etc.). Be sure to add your dependent before adding the CTC information.

Under Federal Tax > Other Tax Situations, you will be first asked to add your third stimulus information and work through those questions. Then, you will be asked if you received any Advance Child Tax Credit or ACTC payments - answer Yes to this, even if you did not receive the payments.

Below are the screen steps about the Recovery Rebate Credit which are followed by the Advance Child Tax Credit screens.

Step 1: Click on the link Other Tax Situation

Other Taxes, RRC, ACTC

Step 2: Click Yes if you received Stimulus 3 payments

Recovery Rebate Credit

Step 3: Click Next here.

Recovery Rebate Credit

Step 4: Enter your stimulus 3 payment. The IRS will compare your entry with the payment they made or not. If you should have received an higher amount than paid to you, you will receive the Recovery Rebate Credit.

Recovery Rebate Credit

Step 5: Here you can Edit your Recovery Rebate entry or remove it via the link: I'd like to remove this information. Or click on Let's move forward e Recovery Rebate Credit.

Recovery Rebate Credit

Step 6: You will now be asked about the Advance Child Tax Credit Payments.

Advance Child Tax Credit

Step 7: Follow the screen options about the Advance Child Tax Credit Payments. You most likely received IRS Letter 6419 with details about your Advance Child Tax Credit Payments.

Advance Child Tax Credit

Add your Advance Child Tax Credit or ACTC payment information on the screen and work through the remaining prompts. You will want to enter the advance payments as they amount from your records or from IRS Letter 6419. See an example of what IRS Letter 6419 may look like.

Step 7 etc.: Many questions need to be answered even if they do not apply for you to be able to e-file your return.

Advance Child Tax Credit

To finalize the credit, click File on the left and provide the information requested for the Credit Eligibility Questions.

Note: The IRS reserves the right to offset your tax refund composed of the Child Tax Credit if you have an outstanding federal or state debt, owe child support, etc. The advance payments were not subject to an offset.

Background, Advance Payment Details

Important: The below information is archived as the CTC advance payments have expired.

Beginning in 2021, advance payments of the 2021 Child Tax Credit were sent out monthly.

One or more scenarios might apply to you on how to apply or receive the 2021 Child Tax Credit or CTC advance payments and how you will report them on your 2021 Return.

A: If you filed a 2020 return with the IRS and you are eligible for the 2021 Child Tax Credit, the advance payments should have been submitted to you automatically based on the information in your 2020 tax return. If for any reason you did not want the advance CTC payments, opt out or un-enroll using the portal link below.

B: If you need to make adjustments, e.g. add or remove one or more dependent(s), change bank deposit information, opt-out or un-enroll from the advance payments, etc., use the portal link below. The following dates outline the changes you can make and when:

  • As of November, 2021, you can:
    1. View your 2021 CTC eligibility status.
    2. Opt-out or unenroll from advance payments.
    3. View payments made to you by the IRS.
    4. Make changes to your bank/direct deposit information for payments.
    5. Change your mailing address for check by mail payments.
    6. Make changes to your 2020 or 2021 tax return based adjusted gross income or AGI
  • In Fall, 2021: 2021 dependents, and 2021 filing or marital status.

Note: Consider creating an account as the IRS will be using this service for an IRS account beginning in summer of 2022.

Since these advance payments were for the 2021 Return, they are ultimately determined by your estimated 2021 information which is based on your 2020 or 2019 information. If your information has or will change in 2021, make these adjustments so you get the right amount.

IRS Child Tax Credit Update Portal

C: Report your 2021 advance payments of the CTC on your 2021 Tax Return. Sign up for an eFile account or sign in here and e-file your 2021 Return by April 18, 2022. If you received at least one advance payment of the Child Tax Credit (CTC) from July to December 2021, you will receive Letter 6419 from the IRS. This letter will tell you the total amount of advance CTC payments you received for 2021. Report the amounts you received on the Advance Child Tax Credit form in your account from your IRS Letter 6419. We will then report this on your Schedule 8812 which we will prepare for you, and calculate your remaining Child Tax Credit on your return.

D: If you do not have income or do not normally file, file a simple return on or use the IRS free CTC or stimulus filing tool.

Sample Portal Screenshots

1. Showing that you will not receive the advance payments.

IRS Portal Profile

2. Your IRS Child Tax Credit advance payment information.

IRS Portal Profile

3. Clicking on the Edit link as shown in the screenshot above, you will be able to update your advance payment bank/direct deposit information.

IRS Portal Edit Direct Deposit - Part 1

IRS Portal Edit Direct Deposit - Part 2

E: If you did not yet file a 2020 tax return or generally do not file a return - or non-filer return - use one of these 3 options to file a 2020 tax return now.

Get the CTC payment amount details here.

F: If somebody claimed one of your dependent(s) - you should have claimed in 2020 or should claim in 2021 - incorrectly or correctly on their return, take these steps:

  • F.1: Option 1. You can ask the person to use the IRS opt-out, un-enroll tool via the link above and remove the dependent(s) for Tax Year 2021. If the person is not cooperative and does not agree to remove the dependent(s) for Tax Year 2021 via the tool, please follow the instructions here on wrongly claimed dependents. If the person agrees to remove the dependent(s) for Tax Year 2021 via the link above (IRS opt-out, un-enroll portal), then you add the dependent(s) via the same link or tool as your 2021 dependent(s). Then, claim the remaining payments on a 2021 tax return.
  • F.2: Option 2. Alternatively, the person agrees to not list the dependent(s) on their 2021 tax return in 2022, but you would list the dependent(s) on your 2021 tax return in 2022. This would mean that the person who claimed the dependent(s) for 2020 would receive the advance Child Tax Credit payments during 2021, however would have to pay back the advance Child Tax Credit payment in form of a reduced 2021 tax refund or additional 2021 taxes owed in 2022 based on their 2021 tax return.

Visit the 2021 Child Tax Credit and advance Payment page here for a comprehensive overview of the 2021 CTC.

Contact an Taxpert® if you have further questions.