When it comes to money, almost everybody knows they should spend less and save more.…
Discover if you qualify for this monthly stimulus, how much you should expect, and when.
I’m sure you have heard about it in the news, seen headlines in your social media news feed, or maybe even heard people talking about it around you. I’m referring to the 2021 Child Tax Credit which has been extended by the American Rescue Plan Act of 2021. You probably have several questions regarding this stimulus check, like, what is it exactly, who is it for, and how much it is? In this article, all those questions and more will be answered.
What is the Child Tax Credit?
“The federal child tax credit (CTC) is a partially refundable credit that allows low- and moderate-income families to reduce their tax liability dollar-for-dollar by up to $2,000 for each qualifying child.” (TaxFoundation) The CTC is not exactly new, but it’s “big news” because some temporary changes have been made to the CTC for the 2021 tax year.
Starting July 15th, 2021, families were automatically enrolled to receive–via direct deposit in most cases–an advance of half of their child tax credit in monthly increments, and receive the other half after they have filed their 2021 taxes. Below I’ll tell you what requirements you must meet to qualify. If you qualify but are not interested in receiving advance payments, you can go to the Child Tax Credit Update Portal to opt out at any time, even if you have already received payment(s).
Who Qualifies for 2021 Advanced Child Tax Credit?
According to the IRS, these are the requirements that you must meet. For those that filed jointly with your spouse, you both must meet the following requirements:
- Filed a 2019 or 2020 tax return and claimed the credit on the return; or
- Provided your information in 2020 to receive the Economic Impact Payment using the Non-Filers: Enter Payment Info Here tool; and
- A main home in the United States for more than half the year (the 50 states and the District of Columbia) or file a joint return with a spouse who has a main home in the United States for more than half the year; and
- A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number; and
- Single taxpayers with adjusted gross income up to $75,000; joint taxpayers with adjusted gross income up to $150,000.
How Much Can You Expect to Receive and for How long?
You can expect to receive up to $300 per child 5 years old or younger, and up to $250 per child age 6-17. These payments will be disbursed using the method of your 2020 tax refund. If you did not receive a refund for 2020 or you would like to change the method of payment, please visit the Child Tax Credit Update Portal to manage your account. Payments should be received on the 15th of each month ceasing after December 2021.
What about 2021 Newborns? Do they qualify for the Child Tax Child?
If you are expecting a newborn in 2021, or have already had a newborn this year, first I would like to say, “Congratulations”. Secondly, yes your new bundle of joy will qualify for the Child Tax Credit. Simply go to the Child Tax Credit Update Portal, to add your newborn to the portal. Of course, you should have already received their social security number to add them.
Way to go, you are now an expert on all the updates to the 2021 Child Tax Credit. To recap, we learned that most families with children age 17 and younger will be receiving a monthly advancement of their 2021 Tax Credit until December. Some families may prefer to receive their entire CTC at the time of their 2021 tax refund and will need to opt out using the Child Tax Update Portal.
By: Kiameshea Prewitt, AFC®, CCRS™. Kiameshea Prewitt is an Accredited Financial Counselor, Certified Credit Repair Specialist, and member of the Association for Financial Counseling and Planning Education and the Financial Therapy Association.