Due to COVID-19, courts may require face coverings for all meetings or hearings. We recommend taking one with you so you are not turned away.

COVID-19: Expanded Child Tax Credit to Help Families in 2021

Last Updated On: 4/28/2021 12:25:38 PM

How was the Child Tax Credit changed for 2021?

The American Rescue Plan Act of 2021 recently increased the amount of the Child Tax Credit for most taxpayers from $2,000 to $3,000 for the 2021 taxable year only.   The credit is increased to $3,600 if a qualifying child is under 6 years at the end of the year.  

The Child Tax Credit will now be available through advanced payments during 2021. This means you could begin receiving payments as soon as July 2021.

How do I receive the tax credit? 

Your eligibility for the credit will be based upon the information you provide on your 2019 or 2020 tax return - whichever is the most recent on file.  The IRS will soon send letters to those who are potentially eligible for the credit.  But there is no need to wait for the letter from the IRS. Please your file your 2020 tax return as soon as possible, so that you can receive all the money you are owed.

If you do not file a tax return, you will not receive the credit. Even if you do not have income or normally file taxes, you should consider filing this year if you have children. Keep reading the rest of this article to learn more.

Am I eligible for the Child Tax Credit?

A child generally qualifies you for the credit if the child meets these rules:

  • The child is your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or any descendant of any of them.
  • The child was no older than 17 at the end to 2020.
  • The child did not provide over half of his or her own support for 2020.
  • The child lived with you for more than half of 2020 (some exceptions apply).
  • The child is claimed as a dependent on your tax return.
  • The child does not file a joint tax return for the year.
  • The child was a U.S. citizen, U.S. National or a U.S. resident alien.
  • The child has a Social Security number.

When will I get this payment?  

Individuals eligible for a 2021 Child Tax Credit can receive a portion of the credit in advance starting in July 1, 2021 to December 31, 2021. They will receive the rest when they file their 2021 taxes, in 2022.

How frequently will these payments be sent? 

The advance payments will be distributed monthly between July 1, 2021 and December 31, 2021.

How much would the payments be?

That depends on each taxpayer’s situation. It won’t be an easy calculation either, as it depends on each individual person’s household factors. It will depend on things like:

  • adjusted gross income, and
  • the number and age of qualifying children.

Also, the advanced payments can generally, with some exceptions, only be issued in equal amounts, that are up to 50 percent of the credit of the estimated eligible total credit for each taxpayer situation.

How do I opt out of advance tax credit monthly payments and receive a lump sum in 2022 with my 2021 tax refund?   

By July 1, 2021, the IRS will open a portal on IRS.Gov for the new child tax credit payments. You will be able to elect a lump sum payment to be received in 2022.

What if I have an unusual family situation, like a divorce with a split custody agreement in place?

We are aware that family situations vary.  The IRS Portal which will be ready in July 2021 will allow you to update your information.

How do I get the credit if my child was born or adopted in 2021?  

You are still eligible for the credit.  After the child is born or adopted, you can provide this new qualifying child information to the IRS in 2022 when you file your 2021 tax return or by using the IRS Portal (to be ready by July 2021).

What if I did not work in 2021, am I still eligible for child tax credit?

There are no earned income requirements for 2021.  You are eligible if you receive the child tax credit if you receive Social Security or SSI as long has you have a qualifying child. So even if you do not normally file taxes because you do not have income or you have just a little income, you should file taxes this year. The deadline is May 17, 2021

What are the income limitations for the 2021 child tax credit?  

The adjusted gross income in 2021 must be under $75,000 for single filers, under $150,000 for married filing jointly, and under $112,000 for head of household filers.  Phase out begins if you earn above these amounts.

Will this increased child tax credit amount become permanent?  

Right now, the increased amounts are for the 2021 tax year only.

How do I notify the IRS of any changes related the Child Tax Credit?

The IRS is developing a Portal. It is supposed to be ready by July 2021.

What if I need help filing taxes? Are there places I get help for free?

For low income families, you may be able to get help in person from a Volunteer Income Tax Assistance site or the AARP. 

If you want to file online, you can go to myfreetaxes.com or the IRS Free File website which shows you a lot of options for filing online.

Again, the deadline to file taxes this year is May 17, 2021

This is general legal information. For guidance about your situation, talk to a lawyer.