Changes to the 2021 Child Tax Credit
By: Stacey Nickens
Summer is just around the corner. Many of us may be preparing for pool days or vacations to the beach. Whether you plan to be drinking sweet tea or wine coolers, you may be interested to know that this summer won’t just bring more heat. It may also bring advanced payments of the increased and revamped child tax credit.
Come tax time, eligible parents usually receive a lump sum payment of their child tax credit or have their credit deducted from any tax payments that they owe.
However, the child tax credit will be distributed in a different manner for the 2021 tax year. Eligible parents will receive their 2021 child tax credit in monthly payments that will begin in July.
Eligible parents will receive half of their child tax credit through monthly payments of $250 or $300, beginning in July and continuing through the end of the year. Eligible families will receive the remainder of their credit in a lump sum payment when they file their 2021 return. In the end, eligible families will receive up to $3,000 per qualifying child between the ages of 6 and 17 and up to $3,600 per qualifying child under the age of 6.
Accordingly, eligible parents will receive monthly payments of $300 for children up to 6 years old and then a lump sum of $1,800 when they file their 2021 return. Eligible parents will receive monthly payments of $250 for children ages 6 to 17 and then a lump sum of $1,500 when they file their 2021 return. The credit will include children who turn 17 in 2021.
Eligible parents will include:
- Married taxpayers filing jointly who earn less than $150,000.
- Heads of household who earn less than $112,500.
- Single filers who earn less than $75,000.
If parents do not want to receive the credit via monthly payments, they will have the opportunity to opt out by using an IRS portal. The portal will be available by July 1. Additionally, you will be able to use an IRS portal to update your income, filing status, or number of qualifying children if any of the above have changed since you filed your 2020 return.
The IRS has not yet announced if payments will go out via direct deposit or via paper check.
If you have any questions about your 2021 child tax credit, do not hesitate to reach out.
