Child Tax Credit

This page gives an overview of the advance child tax credit payments, details on the child tax credit changes, how the reconciliation process will work, what the IRS Child Tax Credit Update Portal is and what an individual can use it for, and some frequently asked questions on the child tax credit.

What is Child Tax Credit

Under the American Rescue Plan Act of 2021 (that became law in March of 2021) one half of the total child tax credit is being distributed to eligible taxpayers each month from July – December. 

This means eligible taxpayers will receive up to one-half of their 2021 child tax credit during the last half of 2021 and the other half when they file their 2021 return.

The advance payments are being calculated based on information from the taxpayer’s 2020 federal return or 2019 return if the 2020 return has not been filed at the time the advance payments begin. 

Child Tax Credit 2021 Qualifications

Any taxpayer who has a qualifying child is eligible to claim the child tax credit. A qualifying child is defined as a child under the age of 18 that is the taxpayer’s dependent.

For more information see the Topic B: Eligibility for Advance Child Tax Credit Payments and 2021 Child Tax Credit – Questions B1, B2 and B3.

Tax Credit Value

The amount of each monthly payment will be $250 for each eligible child age 6 -17 and $300 for each child under age 6.

Monthly Payment Schedule

The monthly advance child tax credit payments will be distributed on July 15, August 13, September 15, October 15, November 15 and December 15.

Eligible taxpayers will have the monthly payments direct deposited if the IRS has their bank account information. Otherwise, a check will be mailed to them at the address the IRS has on file (usually the address on their latest federal income tax return).

Other things to know about the Advance Child Tax Credit Payments

• They are not subject to offset
• They are subject to garnishment
• A letter informing the taxpayer how much advance child tax credit they received in 2021 will be sent to the taxpayer by January 31, 2022.
• IRS has a page dedicated the Advance Child Tax Credit Payments which includes a link to the Update portal which is labeled Manage Payments

How to opt out from Advance Monthly Payments

If an individual wishes to opt-out of receiving any remaining advance payments they can do this by going to the IRS Child Tax Credit Update page and requesting to unenroll from receiving any remaining monthly payments.

For more information see the Topic J: Unenrolling from Advance Payments FAQs page on the IRS website. This page answers questions regarding opting out such as why someone may want to opt-out, what the deadline is for the opt-out to go into effect for the next payment, etc.

How does the monthly Child Tax Credit work

Here are the details on how the child tax credit is calculated for 2021 including the reconciliation of the calculated credit with the advance payments that a taxpayer received during 2021.

Advance Child Tax Credit Payments

The child tax credit for 2021 is:

• $3,000 for each qualifying child ages 6 -17
• $3,600 for each qualifying under age 6

The credit is fully refundable for those taxpayers who had their main home in the United States for 2021.

For 2021, half of the credit will be paid in advance to all eligible taxpayers.

For those taxpayers who did not have their main home in the United States for more than half the year, the old rules will apply for the child tax credit and the advance child tax credit.

Phase-Outs for the Child Tax Credit

The 2021 child tax credit has two phase-outs:

1st Phase-Out – The credit begins to be reduced to $2,000 when AGI reaches the following:

• Single filers - $75,000
• Head of household filers - $112,500
• Married filing joint filers - $150,000

2nd Phase-Out – Remaining $2,000 credit will begin to be reduced to zero when the AGI reaches the following:

• Married filing joint filers - $400,000
• All other filing status’ - $200,000

How the Child Tax Credit will affect your taxes

Any taxpayer that receives advance payments must reconcile, on Schedule 8812 (Credits for Qualifying Children and Other Dependents), the total payments received during the year with the calculated 2021 child tax credit.

The result of the reconciliation will be:

• Refundable credit – Calculated credit is greater than the advance payments received.
• Additional Tax – Advance payments received are greater than calculated credit.

Safe Harbor for Excess Advance Payments

For lower income taxpayers up to $2,000 per child will not need to be repaid even if the advance payments exceed the calculated child tax credit.

Here is how it works:
Taxpayer does not have to repay an overpayment of up to $2,000 per child (Safe Harbor amount) as follows:

• Single – Full safe harbor amount when AGI is below $40,000. Phases out between $40,000 and $80,000.
• Married filing joint – Full safe harbor amount when AGI is below $60,000. Phases out between $60,000 and $120,000.
• Head of Household – Full safe harbor amount when AGI is below $50,000. Phases out between $50,000 and $100,000.

For more details see Topic H: Reconciling your Advance Child Tax Credit Payments on your 2021 Tax Return on the IRS website.

IRS Portal

This IRS online tool (Manage Advance Payments) gives eligible individuals the following information:

• Date and amount of payment
• Payment method – If direct deposit will show the last 4 digits of bank account
• Amount of upcoming payments
• Whether the 2020 return or 2019 return was used to calculate the payments
• History of payments along with the total amount they have received for the year

Individuals can also do the following:

• Opt-out (un-enroll) from receiving payments
• Add or update bank account information
• Update address information – important for those who are receiving their payments by check and to be sure the IRS letter 6419 in January that contains the total payments the taxpayer received is mailed to the correct address.

Beginning in the near future individuals will also be able to:

• Make changes to their filing status, income or number of eligible children
• Re-enroll if they opted-out earlier

Cut-off date for making changes for each Advance Payment

The last day to make a change to their bank account information, un-enroll from receiving the advance payments or make other changes to their information is:

• August payment: August 2
• September payment: August 30
• October payment: October 4
• November payment: November 1
• December payment: November 29

For more details see the following on the IRS website:

• Publication 5549 (IRS User Guide: Child Tax Credit Update Portal)
• Child Tax Credit Update Portal page

How to access the Child Tax Credit Portal to manage Advance Payments

In order to access the portal, individuals will need to authenticate themselves via ID.me.  The authentication process requires an individual’s photo identification (such as a driver’s license or passport) and a mobile phone.

It is important that any taxpayer that receives the advance child tax credit payments sign in and go through the authentication process before the end of this year. This is true even if a taxpayer does not need to make any changes to their bank account information, address, filing status, income or number of eligible children.

By having an account already set up, the taxpayer will be able to easily access the total amount of payments that they received if they misplace or do not receive the letter from the IRS that informs them of the total payments they received. This information is necessary in order to do the reconciliation on Schedule 8812 when their 2021 return is prepared. If the total amount of the advance payments is not correct then the processing of their return will be delayed and any refund that is shown on the return will also be delayed.

For more details see Topic K: Verifying Your Identity to Manage Your Payments on the IRS website.

FAQ

• I don’t file taxes. Can I still receive child tax credit checks?

  Individuals who do not normally need to file a tax return may file a simplified return using the IRS Non-Filer Sign-up Tool to receive the advance child tax credit.

• Can I get a check for my baby born in 2021?

  An individual with a child that was born in 2021 is eligible to receive an advance payment for that child.

  Once the IRS has added the ability for eligible taxpayers to make changes to the number of dependents on the IRS Child Tax Credit Update Tool an individual can add the information for the child born in 2021 and receive an advance payment for that child for the remainder of the year.

• What if I share custody of a child?

  The IRS has provided commonly asked questions regarding shared custody of children.

  For guidance on how sharing custody of a child affects the advance payments see Topic M: Commonly Asked Shared Custody Questions on the IRS website.

• Why didn’t I get advance payment check for my child?

  If an individual did not receive an advance payment for their child, they should check the status of their payment by logging into the IRS Child Tax Credit Update Portal.

  Some of the reasons they may not have received a payment are:

  • If the individual is expecting the advance to be direct deposited, the bank account information the IRS has on file for the taxpayer is not correct.
  • If the individual is expecting a check, the mailing address the IRS has on file may not be correct.
  • The individual may not have filed a 2020 or 2019 federal income tax return.
  • The individual filed a 2020 federal return; however, the IRS has not completed processing the return.
  
  

• Is the Child Tax Credit taxable?

  These payments are not taxable to the taxpayer. The payments that a taxpayer receives during 2021 are an advance of their 2021 Child Tax Credit.

  For more details see Topic A: General Information – Question 10 on the IRS website.

• Can I get the Child Tax Credit with a 1099?

  Yes. Any individual that has an eligible dependent child can receive an advance child tax credit payment. The only income limitation is when the credit begins to phase out when an individual’s AGI reaches $75,000 ($150,000 for Married Filing Joint).

• Do you have to pay back the Child Tax Credit?

  An individual may have to pay back part of the total advance child tax credit that they received, if the amount of the calculated 2021 Child Tax Credit is less than the total advance child tax credit that they received in 2021.

• Can you get the Child Tax Credit with unemployment?

  Yes. Any individual that has an eligible dependent child can receive an advance child tax credit payment.  Income is not required in order to be eligible for the child tax credit.

  The only income limitation is when the credit begins to phase out when an individual’s AGI reaches $75,000 ($150,000 for Married Filing Joint).

• When does the Child Tax Credit payment start?

  The advance child tax credit payments began on July 15 and will continue each month through December.

• Can I claim the Child Tax Credit for Previous Years?

  Yes. The Child Tax Credit has been available for many years. Before 2021 the child tax credit was at a lower amount of the credit and only a portion of the credit was refundable. 2021 is the only year where the advance payments of the child tax credit are available.

• Why do you lose the Child Tax Credit at age 17?

  Under the American Rescue Plan Act of 2021, the eligibility for the child tax credit now includes dependent children who are 18 and under. Any dependent over 18 does not qualify for the child tax credit.

Additional Child Tax Credit Resources

To get more information on the Advance Child Tax Credit and the Child Tax Credit see the following on the IRS website:

• FAQs about the Advance Child Tax Credit
• Publication 5534-E – Advance Payments of the Child Tax Credit
• Advance Child Tax Credit Payments in 2021 page