What is the Expanded Child Tax Credit?
The expanded Child Tax Credit (CTC) will provide a monthly cash benefit for nearly all families with children under the age of 18 years old. This monthly benefit will begin July 15th and help put more money in the pockets of hardworking parents to cover monthly expenses such as childcare, gas or groceries so they can get back to work and fuel our economic recovery.
Thanks to the American Rescue Plan, the newly expanded the Child Tax Credit (CTC):
• Provides advance monthly payments
• Increases the benefit for families earning up to $150,000 from $2,000 to $3,000 a year, and gives an additional $600 benefit for children under the age of 6
• Extends eligibility to children up to age 17
• Makes the benefit fully refundable, qualifying families earning very little or no income
Typically the Child Tax Credit is given as a credit on annual tax filings, however thanks to the American Rescue Plan, for the 2021 tax year families will receive a cash advance each month equal to about $300 a month for each child 5 and under and as much as $250 a month for each child between the ages of 6 and 17. These payments will begin on July 15th and will continue monthly through December 2021. The second half will be provided as a credit on your 2021 tax return. The Child Tax Credit is not taxable income and will not be considered income for other federal benefits.
Am I Eligible?
• YES – if you are a single filer and your modified adjusted gross income is under $75,000.
• YES – if you are married and filing jointly and your modified adjusted gross income is under $150,000.
• YES – if you are a head of household filer and your modified adjusted gross income is under $112,500 for head of household filers.
• YES – if you have $0 in income, you can still receive advance payments.
*The credit begins to phase out above those thresholds.
Some noncitizen families are eligible as long as a child has a Social Security Number. Even in cases of one parent with an Individual Taxpayer Identification Number (ITIN) and one parent with a Social Security Number, the family will be eligible as long as the child has a Social Security Number.
What Do I Need to Do?
You must file your 2020 tax return. You can do so online through IRS Free File or by finding a trusted tax professional. If you don’t normally file tax returns, you can use this Child Tax Credit Non-filer Sign-up Tool.
How Will I Receive My Tax Credit?
If the IRS has your bank information, you will receive it as a direct deposit. If the IRS does not have your bank account information, you will receive your advance Child Tax Credit payments by mail.
Who is Considered a Qualifying Child?
1. The child is the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, a grandchild, niece, or nephew).
2. The child does not provide more than one-half of his or her own support during 2021.
3. The child lives with the taxpayer for more than one-half of tax year 2021.
4. The child is properly claimed as the taxpayer’s dependent.
5. The child does not file a joint return with the individual’s spouse for tax year 2021 or files it only to claim a refund of withheld income tax or estimated tax paid.
6. The child was a U.S. citizen, U.S. national, or U.S. resident alien.
What If I Don’t Want to Receive Advance Payments of My Tax Credit?
You can opt out of the advance payments and choose to receive your full tax credit on your 2021 tax return. To manage your advance payments, visit https://www.irs.gov/credits-deductions/child-tax-credit-update-portal.
Is the Expanded Child Tax Credit Permanent?
Currently, the expanded Child Tax Credit is only authorized for the 2021 tax year. There is support from the Biden Administration and congressional Democrats, including Congressman Perlmutter, to permanently authorize this major tax relief for hardworking families. The expansion of the Child Tax Credit helps all families succeed, from helping to cover basic monthly expenses to helping with childcare and college savings. Studies show that these monthly payments have a spillover effect that helps lift Main Street business, create jobs and stimulate the economy. Each dollar invested in the Child Tax Credit produces up to $1.50 in the local economic spending and $8 in economy-wide return on investment.
Additional information and resources can be found here:
- IRS Child Tax Credit Information Page
- White House Child Tax Credit Information Page
- CTC Flyer (English)
- CTC Flyer (Spanish)