On July 15, 2021, more than 36 million eligible American families received their first CTC payment.
For this year only, the CTC is fully refundable. The CTC has also increased from $2,000 to $3,600 per child for children under the age of six and $3,000 for children ages six and older. Additionally, the age limit for qualifying children was raised from age 16 to 17.
How will I know if the IRS will send me the periodic child tax credit (CTC) payments?
If the IRS determines you’re eligible based on your most recent federal tax return, you will receive a letter in the mail. The first letters were mailed beginning June 4, 2021 and inform the taxpayers they may be eligible to receive the advanced CTC payments. See letters 6416 and 6416-A here.
The second batch of letters were mailed to eligible taxpayers on June 28, 2021 and informed them of the expected monthly payments amounts. This letter (6417) has a message from President Biden as well.
The final letter will be issued no later than January 31, 2022 and will provide the total amount of advanced CTC received by the taxpayer during 2021. This letter will be required to complete the taxpayer’s 2021 tax return.
Keep these letters with your tax records as you will need them to file your 2021 tax return.
How will I know the amount of my child tax credit (CTC) payments?
The IRS will determine payment amounts based on either your 2020 or 2019 federal tax return. If your 2020 return hasn’t been processed, the IRS determines your CTC payment amounts using your 2019 return.
If you are not required to file a tax return, but are still eligible for the CTC payments, the Treasury Department and the IRS recently unveiled an online Non-Filer sign-up tool. The IRS Non-Filers tool is also available for those who still need to register to claim their third round of Economic Impact Payments (also known as stimulus checks). If you did not receive your first and second Stimulus payment, you must file a tax return to claim the Recovery Rebate Credit (RRC). If you used the Non-Filer tool for the first or second stimulus check, you do not need to use the new tool to receive the advance CTC payments.
Who is eligible for the advance credit payments?
All legal guardians with a qualifying dependent child (see the dependent rules below) are eligible. This not only includes birth parents, but also grandparents, foster and adoptive parents, shared-custody parents, and more.
Taxpayers must meet the following requirements to claim the advance Child Tax Credit payments:
- They must have filed a 2019 or 2020 return and claimed the Child Tax Credit; or
- Entered the required information in the Economic Impact Payment Non-Filers tool or the new Advance Child Tax Credit 2021 Non-Filer tool.
- Have a main home in the U.S. for more than half the year.
- Have a qualifying child under age 18 at the end of 2021.
- Made less than the credit threshold limits.
An individual must also meet the following requirements to be a qualifying child:
- The child must have a Social Security number.
- The child must be under age 18 at the end of 2021.
- The taxpayer must be related to the child and/or have legal guardianship.
- The child must live with the taxpayer in the U.S. for more than half the year.
- The child can’t provide more than half of their own support.
Note: More than half a year means six months and one day at a minimum, so you may benefit from keeping a log of where the child spends each night if you share custody.
This tool, The Advanced Child Tax Credit Eligibility Assistant, can be accessed by going to the Advance Child Tax Credit in 2021 page and clicking on the Eligibility Assistant link.
Child Tax Credit (CTC) Income Limits
The full CTC is available to taxpayers with an Adjusted Gross Income (AGI) of less than:
- $75,000 for taxpayers using the Single and Married Filing Separately filing statuses.
- $112,500 for taxpayers using the Heads of Household filing status.
- $150,000 for taxpayers using the Married Filing Jointly and Qualified Widow(er) with Dependent Child filing statuses.
The phase out rate for the credit is $50 for each $1,000 of adjusted gross income (AGI) over the threshold amount.
What is the Child Tax Credit (CTC) Eligibility Assistant?
The IRS estimates your 2021 advance CTC based on your most recent tax return filing. While the questions refer to the 2020 tax return, if your answers will be different for the 2021 tax year, please see a Tax Pro or go to Advance Child Tax Credit in 2021 and update your information by using the correct tool in the irs.gov Child Tax Credit Update Portal (CTCUP).