There have been some important changes to the Child Tax Credit that will help many U.S. families get advance payments starting this summer. The American Rescue Plan Act (ARPA) of 2021 expanded to Child Tax Credit (CTC) for tax year 2021 only.
The expanded Advance Child Tax credit means:
1. The credit amounts will increase for a large number of taxpayers.
2. The credit for eligible children is fully refundable, which means that U.S. taxpayers can benefit from the credit even if they don’t have earned any income or are not liable of any income taxes.
3. The credit will include children that turned 17 years of age in 2021.
4. Taxpayers may receive part of their Child tax credit in 2021 before filing their 2021 tax returns.
For tax year 2021, families claiming the Child tax credit will receive up to 3,000 dollars per eligible child between the ages of 6 years and 17 years at the end of 2021. They will receive $3,600 per eligible child under age 6 years at the end of 2021. Under the former law, the amount of the Child tax credit was up to 2,000 dollars per eligible child under the age of 17 at the end of the year.
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For incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.
Early payments of the 2021 Child Tax Credit will be made regularly from July through December to qualified taxpayers who have a main home in the U.S. for more than half of the year. The total of the Early payments will be up to 50% of the CTC. Advance payments will be estimated from information included in eligible taxpayers’ 2020 tax returns (or their 2019 returns if the 2020 returns are not filed yet).
The IRS in their statement at their Website strongly requests people with children to file their 2020 tax returns as soon as possible to make sure they’re qualified for the amount of the Child Tax Credit as well as any other tax credits, including the Earned Income Tax Credit (EITC). Filing electronically with direct deposit also can speed refunds and future advance Child Tax Credit payments.
Qualifying taxpayers do not have to worry about anything other than to file their 2020 tax return if they have not done so.
Qualifying taxpayers who do not want to receive advance payment of the 2021 Child Tax Credit will have the opportunity to decline receiving these payments. Taxpayers will also have the opportunity to Edit & Update information about changes in their income, filing status or the number of eligible children. More details will be announced soon.
The IRS website statements also urges community groups, non-profits, associations, education groups and anyone else with connections to people with children to share this Important information about the Child tax credit. The IRS website states that they will be providing additional materials and information that can be easily shared by social media, email and other methods.
The IRS will provide more information about advance Child Tax credit payments soon.