2021 Child Tax Credit

Blog, Tax Services

Payday is coming early this year for an estimated 39 million households. The IRS recently announced they will begin issuing payments in advance for child tax credit (CTC) starting July 15th. In general, taxpayers receive the child tax credit when they file a tax return. The amount received is based on the number of qualifying children the taxpayer reports. If the credit is greater than the amount of taxes due, the balance is paid out as a refund.

Under the new rules, households will receive half of the tax credit as a direct payment starting in July 2021, and the overall amount of the child tax credit is being significantly increased. This is great news for many families struggling to meet the needs of monthly bills, savings, and budgeting goals.

Here’s What to Expect
The limits for direct payments per child are $1,800 for children age 5 and under, and $1,500 for children age 6 and up. Families only qualify for the increased child tax credit if they have an adjusted gross income under $150,000 for married couples and $75,000 for individuals. AGI above the threshold amount will gradually phase out the CTC credit received. The same eligibility rules for the regular child tax credit apply to the new, higher limits.

The IRS is working to have an online portal up and running by July 1st so individuals may review their personal information on file. If changes are needed, steps will be provided to make any necessary updates. Individuals have several options including the ability to completely opt-out of receiving early payments and receive the full CTC amount come tax filing. Families will also need to review the projected payment amounts to avoid having to repay any overpayments.

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