Let’s find a tax preparation office for you

or

Information regarding browser or device support

Oh no! We may not fully support the browser or device software you are using!

To experience our site in the best way possible, please update your browser or device software, or move over to another browser.

Close
Family Tax Topics

Child Tax Credit 2021: Eligibility and Payments

Jo Willetts, EA Director, Tax Resources Published On June 18, 2021

Share

The Child Tax Credit (CTC) for 2021 has some important changes stemming from the American Rescue Plan (ARP). Learn what the changes are, who qualifies, payment amounts, and when those payments will be issued. Additional information about the IRS portal allowing you to follow, update, or even opt-out of the new payments will also be provided.

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).

Child Tax Credit eligibility assistant

The IRS estimates your 2021 advance Child Tax Credit (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 irs.gov 2021 Advance Child Tax Credit and update your information by using the correct tool in the Child Tax Credit Update Portal (CTCUP).

Did you claim the Child Tax Credit on your most recent tax return?

Where did you live in 2020?

You may qualify - Continue to estimate your Child Tax Credit advanced payments.

What is your filing status?

$
Tip/Help
You are eligible if you have children that you didn't have on your previous tax return. This includes a child born, adopted, or fostered in 2021, or parents who alternate years claiming the children and this is the taxpayer's year.

If you think you have an error on your 2020 tax return, a Jackson Hewitt Tax Pro can help.
Tip/Help
The IRS bases their information on your most recent return when sending payments. If anything changes, including eligibility, the taxpayer must adjust or opt out using the IRS CTC Update Portal.

IRS plans to automatically age up children when determining the 2021 payment.

If you need help filing a tax return, a Jackson Hewitt Tax Pro can help.

Tip/Help
If you or your spouse lived in a U.S. territory or foreign address in 2020 or 2021, you may not be eligible. If you lived in the U.S. in 2020 and are living at a foreign address in 2021, you may want to opt out of the advanced payments.

If you think you have an error on your 2020 tax return, a Jackson Hewitt Tax Pro can help.

- Your estimated 2021 Child Tax Credit

- The amount you may receive from monthly payouts July through December

- The amount you may receive after you file your 2021 tax return.

*If the IRS letter 6417 has a different amount AND the taxpayer received the amount the IRS letter stated, see a Tax Pro for help understanding or explaining how to update their information on irs.gov.

How much will my payments be?

The maximum amount of payment per month is up to $300 for each child under six and $250 for each child six and older. Eligible filers will only receive half of the total CTC in the form of advance payments. Eligible filers will be able to claim the other half of the CTC when they file their 2021 income tax return.

It’s also important to know that eligible filers will be required to reconcile these advanced payments on their 2021 tax return. If filers received more than they are eligible for, they may have to repay the credit when they file their 2021 federal tax return. 

When will the Child Tax Credit (CTC) advance payments be made?

The IRS announced that it will begin making monthly payments beginning in July 2021 using the following schedule:

  • July 15
  • August 13
  • September 15
  • October 15
  • November 15
  • December 15

Can I update how I receive monthly payments?

The IRS is creating an online Child Tax Credit Update Portal (CTC UP) before the first payments begin at irs.gov/childtaxcredit2021. This will initially allow taxpayers to opt-out of receiving advanced payments during 2021. The IRS plans to add the option to update/add bank account information for Direct Deposit in late June.

More functionality will be added to the portal later this year that will allow taxpayers to:

  1. Enter updated address information.
  2. Add, or subtract, qualifying children, including those born or adopted in 2021.
  3. Report a change in marital status.
  4. Report a change in income.

 

 

What if I got advance child tax credit payments and I wasn’t eligible? Will I have to pay it back?

Some taxpayers may not have to repay their advance CTC payments. The repayment protection is a safe harbor program for certain taxpayers who received more advance child tax credit than they qualified for, based on their filed 2021 tax return. This program can reduce or eliminate the amount of advance payment required to be repaid when the 2021 tax return is filed. The repayment protection amounts are based on the taxpayer’s filing status and modified adjusted gross income amounts (MAGI).

The phase out is $2,000 per child and is based on MAGI:

FILING STATUS

NO or LIMITED REPAYMENT¹

PHASEOUT RANGE²

FULL REPAYMENT³

Single and Married Filing Separately

$40,000

$40,000 up to $80,000

$80,000

Head of Household

$50,000

$50,000 up to $100,000 $100,000

$100,000

Married Filing Jointly and Qualifying Widow(er) with Dependent Children

$60,000

$60,000 up to $120,000

$120,000

¹Taxpayers with a modified AGI below the phaseout threshold will not have to repay up to $2,000 per child in advance child tax credit.

²Taxpayers with a modified AGI between the minimum and maximum threshold amounts will have their safe harbor amount reduced and will generally repay part of their advance payments.

³Taxpayer with a modified AGI above the maximum threshold amounts will have to repay their advance payments.

If you have questions, now is the time to work with an experienced Tax Pro at Jackson Hewitt. Find a location near you.

About the Author

Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 25 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.

Jackson Hewitt Editorial Policy

Tax File Minute: Answers from a Tax Insider

What you need to know about the Child Tax Credit in 2021

Related articles

Tax Credits For Families: American Recovery Plan Act 2021

Tax Credits For Families: American Recovery Plan Act 2021

Are there any tax credits or deductions available to families impacted by Covid-19? What must be done to claim these benefits? We’ll discuss each of the benefits included in the American Recovery Plan Act, which is still in the process of being approved by Congress.

View more
Expanding the Earned Income Tax Credit

Expanding the Earned Income Tax Credit

In March, President Biden signed an emergency relief plan, the American Rescue Plan Act of 2021, that expanded and enhanced the Earned Income Tax Credit (EITC) for over 17 million working adults without children by nearly tripling the maximum credit and extending eligibility. This was the largest expansion to the EITC since 2009.

View more
What is the Recovery Rebate Credit? - preview image

What is the Recovery Rebate Credit?

Most individuals have received all three of their Economic Impact Payments, better known as stimulus checks, by now. However, some taxpayers may not have received one or more of their stimulus checks, or didn’t receive the full amount.

View more

Why Jackson Hewitt®?

We see you

Our Tax Pros will connect with you one-on-one, answer all your questions, and always go the extra mile to support you.

We got you

We have flexible hours, locations, and filing options that cater to every hardworking tax filer.

We fight for you

We won't stop until you get every dollar you deserve, guaranteed. It's what we've been doing for over 35 years.