Starting this summer, many families will receive advance payments of their child tax credit, thanks to changes made in The American Rescue Plan Act (ARPA).
The ARPA not only increased the credit amount that many families will receive, but also amended eligibility requirements to include 17-year-old children. The credit for qualifying children is also now both fully refundable and available as an advance payment. These changes are only applicable to the 2021 tax year.
This year, families claiming the child tax credit will receive up to $3,000 for each qualifying child who is between the ages of 6 and 17 at the end of 2021, and $3,600 for each qualifying child under age 6 at the end of 2021. Previously, the child tax credit allowed for up to $2,000 per qualifying child under the age of 17.
Advanced child tax credit payments will be made monthly, from July through December, totaling up to 50% of the child tax credit.
The increased child tax credit amounts are phased out for families with incomes over $150,000 (married filing jointly), $112,500 for heads of household, and $75,000 for all other taxpayers. Advance payments will be estimated from eligible taxpayers’ 2020 tax returns, or 2019 tax returns if 2020 tax returns have not been filed and processed yet.
Eligible taxpayers do not need to take any action to receive advanced child tax credit payments, however the IRS urges taxpayers to file their 2020 tax return if they have not yet done so, to make sure they are eligible for the appropriate amount of credit.
If you have questions about advance child tax credit payments or your eligibility, leave a comment below, or feel free to reach out to me directly, I’m happy to help!