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In July, households that qualify for the Child Tax Credit (CTC) will start receiving their first monthly advance payments of up to $300 per kid. It's expected that IRS will pay half of the tax credit in advance. Eligible families will be receiving their advance monthly credit payments from July through December 2021
The child tax credit is bigger than ever for 2021 thanks to the American Rescue Plan Act (ARPA) of 2021. Thus, families claiming the CTC will receive up to $3,000 per qualifying child between ages of 6 and 17 at the end of 2021. Families with children under the age of 6 at the end of 2021 will receive $3,600 per qualifying kid. Previously, the amount of the CTC was up to $2,000 per qualifying child under the age of 17 at the end of the year.
However, not all parents will qualify for a larger child tax credit, and some won't receive any credit at all. The increased payments are reduced (phased out) for incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers. Families who aren't eligible for the $3,000 or $3,600 credit in 2021, could claim the regular credit of up to $2,000 per child.
The IRS urges people with children to file their 2020 tax returns as soon as possible to make sure they are eligible for the appropriate amount of the CTC. To speed up refunds, it's recommended to file electronically with direct deposit. Those who want to opt out of the advance payments and instead take the full child credit on their 2021 return can do so through IRS portals.
