How the Advance Child Tax Credit May Help Your Family

The American Rescue Plan Act of 2021, which is now law, includes about $2 trillion in pandemic relief funding. Eligible families can receive more financial help as part of the new Act. The Child Tax Credit program has expanded, and eligible families will be getting monthly payments. It may affect your money management in 2021.

What Is the Child Tax Credit?

The Child Tax Credit program is expanded for 2021 and will provide direct monthly payments to those lower-income households with children less than 18 years of age. The revised program allows families up to6 monthly payments, or half the full benefit, and the other half can be recovered when filing taxes the following year (2022 filings for 2021 taxes). There are income maximums to qualify for the program.

Can I Qualify for the Advance Child Tax Credit Payments?

To get eligible for Child Tax Credit, you must either:

  • Have filed a 2019 or 2020 federal income tax return, or
  • Have used the non-tax filer tool on the IRS. Gov. website

If you signed up to receive the economic stimulus payment, you don't need to use the non-tax filer tool to sign up. The IRS will automatically enroll qualified households for the Child Tax Credit based on information provided in your most recent tax return or through the non-tax filer tool. 

If you are an eligible recipient, you should receive information in the mail about any scheduled payments.

The benefit is available for taxpayers with income as follows:

  1. $150,000 - married couples filing a joint tax return or a qualified widow/widower
  2. $112,500 - heads of household
  3. $75,000 if filing as an individual, single tax filer, or married person filing separately

How Much Can My Family Get from the Child Tax Credit Program?

By 2021, the maximum child tax credit increased to $3,600 per child under six and $3,000 per child ages 6 to 17. Monthly payments will be for half the total benefit amount beginning in July 2021. This totals $300 a month per child under six and $250 a month per child for ages 6 to 17. The rest of the credit must be claimed with the tax return filed in the following year, 2022.

How Are the Child Tax Credit Payments Issued? 

The Advance Child Tax Credit payments are issued monthly. Payments end in December 2021. 

What Should I Do If I Do Not Qualify for This Program?

There can be a case that your household may no longer qualify for the Child Tax Credit program due to changes in your income. If so, there is no other alternative at this time.

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