In March of 2021, President Biden signed into law the American Rescue Plan which was intended to help ease the economic burden faced by many families due to the Coronavirus pandemic that has affected the world over the last 16 months. This bill had numerous additional benefits included in it, and one of them may impact you or someone you love. It is the Advance Child Tax Credit payments that are scheduled to begin on July 1, 2021. We want to make sure that you know where to go to find out if you qualify and what you would need to do in order to receive your payments.
How Do I Receive the Advance Child Tax Credit Payment?
First off, this child tax credit payment is actually an advance of a portion of your 2021 child tax credit. In order to qualify for the payment, you MUST have filed your 2020 tax return by May 17 of this year. The IRS is currently setting up two portals, both of which will be live by July 1, that qualified individuals can use to manage their child tax credit and update information pertaining to their situation. The second portal is specifically for non-filers or people whose situations – number of dependents, income, etc. – have changed. You will have two options for how to receive this money. As one of the options, you can take monthly payments from July through December of 2021 and receive the rest of the amount you qualify for when you file your return in 2022. The other option allows you to take a lump sum for the total amount in 2022 when you file your return.
What is the Amount of the Child Tax Credit?
The amount of the tax credit per child is based on your AGI from your 2020 tax return, so it is important that you go to the IRS portal to calculate what your advanced tax credit is going to be as well as determine how you would like to receive your money. In order to receive the lump-sum payment, you will need to opt out of the default monthly payment option. The credit will increase the amount of child tax credit from $2,000 to $3,600 for children under six years old. For children 6-17 years old, families will receive $3,000 per child. You can also claim $500 for children who are 17 or 18 years old and full-time college students between the ages of 19-24. There is a requirement that the children be related to you and reside with you for at least six months out of the year.
Are There Income Requirements?
As far as income eligibility is concerned, married couples filing jointly will be eligible for the full credit if their AGI is below $400,000 and single filers below $200,000. The larger tax credit will begin to phase out if your AGI is above $150,000 for married couples and $75,000 for single filers. The phase-out for heads of household filers is $112,500. The amount will be reduced by $50 for every $1,000 over that threshold. In order to calculate what you are eligible for, visit the Kiplinger 2021 Child Tax Credit Calculator.