New Advance Child Tax Credit Payments
You may have heard some buzz around this new child tax credit, or maybe you’ve already received a deposit from the IRS.
In this blog post, we’ll go over everything you need to know about this new advanced credit.
What is it?
The advance child tax credit program is part of the 1.9 trillion dollar American Rescue Plan, an economic aid package passed in March 2021
How Does It Work?
Something to note is the beginning of the name of this tax credit starts with the word “advance” This is because the tax credit payments that families are receiving now are simply an advance.
The child tax credit is NOT NEW.
However, it has gone through changes since 2019.
💰 In 2019 the maximum credit was $2,000 per child under age 17.
💰 In 2020 it was increased to $3,000 per child under age 18
💰 For 2021 the ages have been split:
- Max credit $3,000 for children ages 6-18
- Max credit $3,600 for children under age 6
The advance payments work like such:
👉 Families receive 6 monthly payments of half the tax credit they are eligible for.
👉 Payments will be paid out from July 2021 – December 2021.
These payments could be:
👉 Up to $300/Month (each child Under 6)
👉 Up to $250/Month (each child ages 6-18)
So, who’s eligible, I bet you’re asking.
The IRS states:
To qualify for advance Child Tax Credit payments, you — and your spouse, if you filed a joint return — must have:
Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return; or
Given us your information in 2020 to receive the Economic Impact Payment using the Non-Filers: Enter Payment Info Here tool; and
A main home in the United States for more than half the year (the 50 states and the District of Columbia) or file a joint return with a spouse who has a main home in the United States for more than half the year; and
A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number; and
Made less than certain income limits.
You can check your eligibility at the link below:
👉IRS ELIGIBILITY ASSISTANT
Note: If you meet the above criteria but are not required to file a tax return, you can still file to get the credit. You can learn more about that at the IRS link below:
👉IRS NON-FILER SIGN UP TOOL
What are the income limits?
If you’re eligible, the amount you receive is based on your adjusted gross income (AGI) (read this blog post to learn how to find your AGI) on your most recently filed tax return.
You’ll receive the full tax credit per child if your AGI is below the listed amount below:
- $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
- $112,500 if filing as head of household; or
- $75,000 if you are a single filer or are married and filing a separate return.
If your AGI is more than the above thresholds, you can still get the credit, but it will be a lesser amount. You can calculate your possible child tax credit by clicking below:
👉Child Tax Credit Calculator
What are your options?
If you’re eligible and your AGI qualifies for the credit, you can still opt out of the advanced payments and get the full credit when you file your 2021 tax return.
You can also manage your advanced payments online with the link below:
👉IRS Child Tax Update Portal
Be Sure To Keep Track
If you receive the advance payments, your tax preparer will need to know how much you received when it’s time to file taxes to calculate the remainder of your credit.
For more bookkeeping, accounting, and tax support join my free community Financially Focused Photographers! Be sure to follow me on Instagram, Facebook, YouTube, and Pinterest.