A Breakdown of the Upcoming Advance Child Tax Credit

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The child tax credit advance is set to be distributed on July 15. Here’s a breakdown of everything you need to know about it.

  • The Payments are an advance on the Child Tax Credit that eligible filers may claim when filing taxes.
  • To Qualify for the full Child Tax Credit:
    • The child(ren) must be under the age of 17 by the end of 2021.
    • The child(ren) may be your son, daughter, stepchild, foster child, sibling, step-sibling, or half-sibling under your guardianship, or a descendant (grandchild, niece or nephew) under your guardianship.
    • Your main home must be located within the 50 states or District of Columbia for at least 6 months (it does not matter if you moved within the US during the year).
    • Be under the following income thresholds:
      • Under $150,000 if Married Filing Jointly, or as a Widow/Widower
      • Under $112,500 if filing as Head of Household
      • Under $75,000 if filing as Single or Married Filing Separate
  • The full Child Tax Credit is as Follows:
    • Children 5 and under as of the end of 2021, $3,600
    • Children 6-17, $3,000
  • If your income is above the above thresholds, your Child Tax Credit will be as follows:
    • Married Filing Jointly - Between $150,000 - $400,000 credit is $2,000
    • All other filing status - up to $200,000 credit is $2,000
  • There is a $500 credit for all dependents that do not meet the Child tax Credit criteria
  • To receive the advance, you will need to have filed taxes during the 2019 tax filing season or 2020 tax filing season. The most recent filing will be used to determine the amount received.
  • A letter was sent by the IRS to all families with their estimated Child Tax Credit Advance amount. A second letter will be sent in January 2022 to update the estimated amount available for the 2022 tax filing season.
  • The advance is 50% of the full credit spread out over the remaining 6 months of the year.
  • You will receive your Child Tax Credit the same way you received your tax refund (if any). They will be delivered either by a check mailed to your residence or by direct deposit into your designated account.
  • You can check your status or update information here
    • This link includes the option to update income information, banking information
  • It is important to stay on top of your Child Tax Credit amount, because if you receive too much, you will be required to reconcile the amount during the next tax filing season in 2022
    • This can happen if:
      • Your income increases above the threshold during 2021
      • You move and reside outside the United States for more than 6 months
      • Your qualified child lived in a different home for more than 6 months
  • You may want to unenroll from the Advance Child Tax Credit payments if you believe that you could face an overpayment or you feel the Child Tax Credit is best used in full during the 2022 tax filing season.
    • You may unenroll here
    • If you choose to unenroll and file jointly, BOTH of you must opt out.
      • If only one spouse or filer of the joint filing opts out, a credit will still be sent based on the income of the spouse that did not opt out.
  • The Opt Out Dates are typically the first Thursday of every month, unless there is a holiday. See the chart below for the exact opt-out dates.
  • If you miss an opt-out date, but submitted an opt-out claim, you will receive the upcoming payment and your opt-out will be processed for the next month.
  • If you do not have an account with the IRS through their website, you will be required to create one and go through their identity verification process in order to access the tools available.

This preceding was compiled for informational purposes only. For tax advice, please speak with your accountant or tax professional.

Image Courtesy of Tax Policy Center
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