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What are the new Child Tax Credit advance payments?

The American Rescue Plan Act (ARPA) expanded the Child Tax Credit for many families. The details are a little complex, but essentially, families will start to receive advance payments of next year’s Child Tax Credit starting this summer. You may have already gotten a letter from the IRS explaining these payments. Here’s how it works.

  1. For tax year 2021 (next year’s taxes), families who claim the Child Tax Credit will receive up to:
    • $3,600 per qualifying child under 6
    • $3,000 per qualifying child between 6–17
  2. Half of that amount will be sent out as payments of up to $250 or $300 per child, on the 15th of every month between July and December this year.
  3. When it comes time to file your taxes next year, you’ll reconcile the amount you're due to claim the remainder of the credit on your return or to pay back any overpayment, if applicable. 

There’s nothing you need to do to get your payment, unless you don’t usually file taxes. The IRS will calculate your amount based on your most recent return and either deposit it into your bank account or send a check to your address on file. You should get a letter from the IRS noting how much your payments will be.

  • If you don’t need to file a tax return, but qualify for this expanded credit, you can use the IRS’s Non-Filer tool to provide them with the information they need to deliver your payments.

If you’re divorced, you may want to opt out of receiving the advance payments. Only one parent can claim the credit for each child each year. If you alternate claiming your child every other year with your former spouse, whoever is not claiming the child in 2021 needs to unenroll. Otherwise, the parent that’s not claiming the child in 2021 may be required to repay the advance child tax credit payments they received.

There are a few eligibility requirements for receiving advance payments of the Child Tax Credit. You, and your spouse if you filed jointly, must have:

  • Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return OR given the IRS your information in 2020 to receive the Economic Impact Payment using the Non-Filers tool
  • A main home in the United States for more than half the year (the 50 states and the District of Columbia)
  • A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number
  • Made less than certain income limits (a modified AGI of less than $150,000 if you’re married and filing a joint return or a qualifying widow; $112,500 if you’re filing as head of household; $75,000 if you’re filing single or married filing separately)

Go to the IRS Child Tax Credit Update Portal to view your eligibility, unenroll from getting advance payments, or to update your bank account information.

  • Any updates you make by August 2 will apply to the August 13 payment and all subsequent monthly payments for the rest of 2021. You’ll receive your July 15 payment by direct deposit in the bank account currently on file with the IRS.
  • Use the Child Tax Credit Update Portal to update your bank account information to get the payments sooner by direct deposit. If you aren’t enrolled in direct deposit, you’ll receive a check in the mail.
  • To stop all future monthly payments, use the unenroll feature in the Child Tax Credit Update Portal. If you are an eligible family who decides to unenroll, you’ll still receive the rest of your child tax credit as a lump sum when you file your 2021 federal income tax return next year. You must unenroll by August 2, 2021 to stop all payments starting in August and the rest of 2021.
  • If you’re married and filing jointly, both spouses need to unenroll.

For the most up-to-date information on the Child Tax Credit and advance payments, visit the IRS Advance Child Tax Credit Payments site. You can also learn more by reading our post here.

Tip: If you haven’t filed your return yet, the IRS urges you to as soon as possible so that you can get any advance payment you’re eligible for. 

Check out this article to read more about the income caps and other changes to the Child Tax Credit.

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