2021 Advance Child Tax Credit: Everything You Need to Know [Updated for July 2021]

• Families will receive $3,000 for each dependent age 6 to 17
• The credit is $3,600 for each dependent under age 6

The standard Child Tax Credit is $2,000 for any dependent under age 17. So, this increases the credit by at least $1,000 or more, depending on the age of the child. It also allows for families to receive advance payments for six months starting in July

Qualifying for the Child Tax Credit depends on two things:

1. Your modified adjusted gross income (the income you claim on your taxes)
2. Whether you have a qualifying child dependent

For the basic CTC, your adjusted gross income must be below $400,000 if you are married filing jointly or below $200,000 for all other filing statuses. However, to receive the expanded CTC and get advance payments this year, the income limits are lower.

“Parents at the lowest income thresholds receive the full value of the credit,” Herceg explains.

The expanded CTC will be phased out if your income is above these limits:

Thus, if you are married filing jointly and make $175,000 annually, you can claim the standard child tax credit ($2,000) next year when you file your taxes. However, you will not get the expanded payment and you will not receive advance payments this year.

In early July, the IRS launched a tool called the Advance Child Tax Credit Eligibility Assistant. This automated tool walks you through qualifying so you can confirm if you are eligible. You will need your 2020 or 2019 tax returns or your W-2s or 1099s and a list of expenses to complete the steps needed to see if you qualify. The assistant is available in English and Spanish.

So, for instance, let’s say you are a single parent who makes $75,000 per year and has two children, age 5 and 15. Your total child tax credit for 2021 would be $6,600—that’s $3,000 for the older child and $3,600 for the younger one.

Since the IRS allows you to advance up to 50% of your CTC for the year, you would be able to advance $3,300. Spread out over the six months of payments, you would receive $550 per month.

“If parents filed a 2020 tax return, then the payments should be automatic,” Herceg says. “Filing a 2020 tax return is the best way to make sure the IRS has the most up-to-date information and to get set up to receive those credits.”

“We strongly encourage families to file their 2020 taxes using free tax prep because many families don’t realize that they actually are eligible for credits or may be eligible to get back money they’ve prepaid in taxes. We estimate that parents leave $12B in unclaimed credits on the table each year by not filing or filing to claim credits like the Earned Income Tax Credit.”

As the IRS states on their website, “The IRS urges people with children to file their 2020 tax returns as soon as possible to make sure they’re eligible for the appropriate amount of the CTC as well as any other tax credits they’re eligible for, including the Earned Income Tax Credit (EITC). Filing electronically with direct deposit also can speed refunds and future advance CTC payments.”

You can use your 2020 or 2019 tax returns to confirm you are eligible to receive payments through the IRS Eligibility Assistant; it’s available in English and Spanish.

If you do not file normally file taxes because you receive federal benefits, such as SSI or SSDI, or because you do not make enough money, the IRS has launched a non-filers tool that you can use to verify you are eligible to receive the advances.

Direct deposit is the fastest method that you can receive these types of payments, which is why the IRS is encouraging people to file their taxes electronically and set up direct deposit. You may receive your payment on the same day they begin to disburse them.

If you do not set up direct deposit, then you would receive your advance payments by mail. The most likely way would be that the IRS will issue you a debit card with the payment. This is how most mailed stimulus payments were handled. Recipients received an EIP card (economic impact payment card) that had their stimulus funds loaded on the card.

You can use the Child Tax Credit Update Portal to add or change your bank account information so you can receive direct deposit. If you have changed banks since you filed your taxes last, you should use this tool to make sure your information is current.

If you filed your 2020 return electronically and used direct deposit for your refund, then your payments should arrive on or just after July 15, 2021. You can use the IRS Child Tax Credit Portal to confirm you are enrolled and scheduled to receive advance payments.

If you have not filed your 2020 tax returns, then this the step that the IRS is encouraging you to take. Even if you don’t traditionally file taxes, you may want to file this year to ensure you receive your advance payments. Otherwise, you can use the IRS Non-filer’s Tool to confirm you are eligible to receive these payments.

If you are co-parenting, only the parent that claims the child as a dependent would receive any advance payment.

1. The child must be your son, daughter, stepchild, foster child, grandchild, niece, or nephew.
2. They must be age 17 or younger in 2021; for the $3,600 CTC, the child must be under age 6 in 2021.
3. The child did not provide more than half his or her own support in 2021.
4. They lived with you for more than half of 2021.
5. You will claim them as a dependent on your 2021 tax returns.
6. The child doesn’t file a joint tax return.
7. They are a U.S. citizen, national or resident alien.
8. The child has a valid Social Security number.

1. The payments will not be garnished for back child support, back taxes, or other Federal or state debts.
2. They can be garnished by private debt collectors, so if you have a garnishment order in place, you may see your payments garnished.

So, even if you didn’t make any income in 2020, you could still file your 2020 tax returns to receive this credit and the advances.