For tax year 2021, 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. They will receive $3,600 per qualifying child under the age 6 at the end of 2021.
The increase – the additional $1,000 or $1,600 - is reduced (phased out), for incomes over $150,000 for married taxpayers filing a joint return, $112,500 for heads of household, and $75,000 for all other taxpayers. The remaining $2,000 is phased out based on the pre-2021 rules. For 2021 the credit is fully refundable.
Advance payments of up to 50% of the 2021 Child Tax Credit will begin to be made regularly from July through December to eligible taxpayers who have a main home in the United States for more than half the year. You can elect not to receive these advance payments.
Like the advance premium tax credit, any advance payment of the Child Tax Credit will be reconciled on the 2021 Form 1040. Please be aware that if you do receive advance Child Tax Credit payments in 2021 this will reduce the potential federal refund on your 2020 Form 1040.
The IRS website has established the following tools to assist families in dealing with the changes to the credit.
Child Tax Credit Eligibility Assistant: allows families to answer a series of questions to quickly determine whether they qualify for the advance credit
Child Tax Credit Update Portal: allows families to verify their eligibility for the payments and, if they choose to, unenroll or opt out from receiving the monthly payments
Child Tax Credit Non-filer Sign-up Tool: allows eligible individuals who don’t normally file an income tax return to register for payments
It is my understanding that the IRS will provide those who receive advance payments with a statement in January. Be sure to save this statement and give it to your tax preparer.