The enhanced payments will put more money in the bank of qualified households.
Sarah Tew/CNETAre you expecting to get a child tax credit payment on July 15? If so, we have good news: You'll automatically receive the monthly payments throughout 2021. But with anything tax-related, the child tax credit rules are pretty complicated.
For instance, there are income requirements you must meet to get the payments -- and your dependents have specific age requirements. The payments are for up to $300 a month per kid, or $3,600 total per kid over the course of this year and next. And, yes, that includes babies born in 2021. And because the monthly payments are optional, eligible recipients can choose to receive the entire lump sum when they file taxes in 2022.
The White House's proposed American Families Plan could extend the new child tax credit in the future. We'll keep you posted. In the meantime, did you know you could claim up to $16,000 in child care expenses next year? Here's what's happening with a potential fourth stimulus check, what to do if you haven't received your third stimulus check, when it could come and how to track it. This story was updated recently.
$3,600 total for each child under age 6
If your dependents are below the age of 6, you can claim up to $3,600 per child as long as you meet the income requirements, which are listed below. That's $1,600 more than the $2,000 that parents were able to claim on their 2020 tax returns.
This includes newborns, even if they're born later in 2021. The parent filing will be able to update the IRS portal with their new dependent information to begin receiving the advance payments this year, said Garrett Watson, a senior policy analyst at Tax Foundation. Otherwise, parents can file a claim on their 2021 tax returns next year.
$3,000 for each kid between ages 6 and 17
If you have dependents who are age 6 or older, you'll qualify for up to $3,000 per kid over the next year, assuming you meet the income requirements. (Refer to the chart above.) This includes your dependents who are 17 years old -- originally, parents could only claim up to $2,000 for each dependent age 16 and younger.
You can also get money for your older kids, although it's not nearly as much. You can claim up to $500 for an 18-year-old, as well as for full-time college students ages 19 to 24.
Here's what parents who share custody of a qualified dependent should know.
Watch this: Child tax credit: Everything we know
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Individuals who make $75,000 or less (or couples who make $150,000 or less) will get the full amount
As long as your adjusted gross income, or AGI, is $75,000 or less, single taxpayer parents will qualify for the full child tax credit amount. After $75,000, the amount begins phasing out. At $240,000, single filers phase out of the tax credit entirely.
If you're married and filing jointly with your spouse, your AGI needs to be $150,000 or less to qualify for the full child tax credit amount. At $440,000, couples will phase out of the tax credit entirely.
The credit phases out by $50 for every $1,000 of income over the threshold amounts for all filers, according to Joanna Powell, managing director at CBIZ.
Child tax credit 2021 qualifications
| Who qualifies | What the law says |
|---|---|
| Single filer | An AGI of $75,000 or less to qualify for the full amount |
| Head of household | An AGI of $112,500 or less to qualify for the full amount |
| Couple filing jointly | An AGI of $150,000 or less to qualify for the full amount |
| Child age 5 and younger | Credit for $3,600 each if parent/guardian meets above requirements |
| Child age 6-17 | Credit for $3,000 each if parent/guardian meets above requirements |
| Nonfiler | Will need to file a 2020 tax return to get the payment |
Heads of household who make $112,500 or less are eligible for the total amount
As a head of household, your AGI will need to be $112,500 or less to qualify for the full child tax credit amount. The amount you could get begins phasing out if your income is over that amount, and by $240,000 you phase out of the tax credit.
People who don't typically file their taxes may qualify, but...
Even if you don't usually file taxes -- you're considered a nonfiler -- you'll need to file a return to qualify for the 2021 child tax credit. IRS Commissioner Charles Rettig said that payments will be automatic for those who file their 2020 tax returns by May 17, so if you don't have your tax return submitted by this time, the IRS won't know to send you a payment.
By July 1, the IRS will open two separate online portals. One of the portals will be crucial for households that don't traditionally file income taxes so they can register their information. Households that have gained new dependents since filing taxes should update their information in the portal to make sure they get the amount they're due.
Some eligible families may opt to receive the full $3,600 per kid in one single installment next year.
Sarah Tew/CNETMore eligibility rules for receiving the new child tax credit checks
- The child you're claiming must live with you for at least six months out of the year.
- You and your child must be US citizens, unlike mixed-status households.
- For married couples filing jointly, at least one spouse needs to have a Social Security number or an ITIN.
- The child must also have a Social Security number -- a child with only an ATIN won't qualify. (This includes adopted children.)
- Parents who share custody of a child cannot both receive the tax credit.
Important: The results here are based on our current knowledge of the law, but should be treated as broad estimates only. Consult a financial planner for a more personalized estimate.
Here's what else to know about the 2021 child tax credit.
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