Kemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Kemberley Washington Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Written By Kemberley Washington Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Kemberley Washington Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Tax Writer Korrena Bailie Editorial Director, Growth ProjectsKorrena Bailie has over a decade of experience reporting and editing personal finance stories and reviews. Her work has been featured in Wirecutter, The New York Times, Bankrate and Credit Karma.
Korrena Bailie Editorial Director, Growth ProjectsKorrena Bailie has over a decade of experience reporting and editing personal finance stories and reviews. Her work has been featured in Wirecutter, The New York Times, Bankrate and Credit Karma.
Korrena Bailie Editorial Director, Growth ProjectsKorrena Bailie has over a decade of experience reporting and editing personal finance stories and reviews. Her work has been featured in Wirecutter, The New York Times, Bankrate and Credit Karma.
Korrena Bailie Editorial Director, Growth ProjectsKorrena Bailie has over a decade of experience reporting and editing personal finance stories and reviews. Her work has been featured in Wirecutter, The New York Times, Bankrate and Credit Karma.
| Editorial Director, Growth Projects
Updated: Oct 14, 2021, 1:00pm
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Millions of American families are starting to receive expanded child tax credit payments this month, receiving up to $300 per month per child via direct deposit.
The optional monthly payments were authorized by the American Rescue Plan Act, which President Joe Biden signed into law in March. It’s an effort to put more money in parents’ pockets as they navigate post-pandemic economic recovery, but it’s also expected to be a significant step toward reducing child poverty in the United States. The legislation includes advanced monthly child tax credit payments from July 15 through Dec. 15.
It’s the first time in history eligible families will receive an advance payment of the child tax credit. According to the Internal Revenue Service, more than 36 million families may qualify for these payments.
Since this is a new initiative by the Internal Revenue Service, we have compiled answers to some of your top questions. If you have a question you do not see here, tweet us @ForbesAdvisor, and we will continue to add to this post.
The child tax credit is a tax credit for families with children. For the 2020 tax year, the IRS allowed you to claim up to $2,000 per child under the age of 17. The 2020 child tax credit reduced the amount you may owe in taxes and it was partially refundable up to $1,400, which means even if you did not owe any taxes you could receive money back. For 2021, the child tax credit amount has increased up to $3,600 for children under 6 and up to $3,000 for children ages 6 to 17. Also, the credit is now fully refundable.
Typically, you qualify for the full payment if your modified adjusted gross (MAGI) is up to $75,000 for single filers and $150,000 for those who are married filing jointly. If your MAGI is more than these thresholds, the IRS will phase out the child tax credit payment in two steps. The first phase reduces your child tax credit from $3,600 per child under the age of 6 ($3,000 per child ages 6 to 17) to no lower than $2,000 by $50 for every $1,000 earned above the threshold. Next, if your MAGI exceeds $200,000 for single filers ($400,000 for married couples), the credit is reduced by $50 for every $1,000 earned, but not lower than $0.
There is no minimum amount of income you must earn to receive the monthly child tax credit payments. Even if you did not work during the year or receive income from other sources, you can still qualify.
While the amount of your monthly child tax credit payment depends on your income, the number of qualifying children, and their ages, you can expect to receive up to $300 per child under the age of 6 ($250 per child ages 6 to 17).
| Monthly Child Tax Credit Payment | Payment Dates |
|---|---|
| Payment #1 | July 15 |
| Payment #2 | Aug. 13 |
| Payment #3 | Sept. 15 |
| Payment #4 | Oct. 15 |
| Payment #5 | Nov. 15 |
| Payment #6 | Dec. 15 |
For most families, you will not need to take any action to receive the payments. The IRS will use your 2020 or 2019 tax return (whichever is recently filed) or information you provided in the non-filer tool —which allows you to register for the monthly child tax credit payments if you are not required to file a tax return—to determine your eligibility.
You can update your bank account information or mailing address using the Child Tax Credit Update Portal.
The IRS will not offset your monthly child tax credit payments for back child support, federal and state taxes owed. However, if your monthly child tax credit payments are not exempt from garnishment from non-federal creditors under federal law.
You may want to consider opting out of the child tax credit payments if you no longer qualify for the tax credit. The child tax credit payments are an advance payout of the 2021 child tax credit, however, the IRS will use your 2020 or 2019 tax return (whichever was filed recently) or information you previously provided in the non-filer tool to determine your eligibility. Therefore, when you file your 2021 tax return next year, you may no longer qualify for the credit if your income exceeds the income threshold or you can no longer claim a qualifying child for the child tax credit. For example, let’s say you claimed four qualifying children on your 2020 tax return, but for 2021, you can only claim one qualifying child. If your advance monthly child tax credit payments exceed the amount you qualify to claim on your 2021 tax return, you may need to pay some or all of it back. You may also want to consider opting out of the monthly child tax credit payments if you’re going to use the full child tax credit to reduce your 2021 taxes owed or boost your tax refund.
The IRS released the Child Tax Credit Update Portal to allow families to unenroll from the payments altogether. You can learn more about how to opt out of the monthly payments here .
If you earn more than these amounts, you may be required to make a partial or full repayment. However, if your MAGI is above the following thresholds, you won’t qualify for repayment protection at all:
The IRS will pay your first advance child tax credit payments based on your children claimed on your 2020 or 2019 tax return (whichever is filed later). Therefore, the person who claimed the child would qualify for the payment. If you did not claim your qualifying child in the previous tax years, but are now eligible to claim your qualifying child in 2021, in that case, you can update the Child Tax Credit Update Portal to inform the IRS to adjust your monthly child tax credit payments. It is also a good idea for the parent who is no longer able to claim the qualifying child to unenroll from the monthly child tax credit payments to avoid repaying the tax credit in 2021. If you are co-parenting, speak with a tax professional to determine who qualifies for the credit in your situation.
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Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make informed tax decisions. Her work has been featured in Yahoo Finance, Bankrate.com, SmartAsset, Black Enterprise, New Orleans Agenda, and more. She frequently appears on NBC's WDSU news broadcast.
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