The new child tax credit program will start on Thursday.
Sarah Tew/CNETCould your family's income or your kid's age disqualify you from the advance child tax credit this week? Though the overwhelming majority of households will qualify for some of this increased tax relief, the payout schedule and requirements can seem rather complicated, especially as they've changed since last year.
The bottom line is that eligible families will get the full amount of the credit credit if they make up to $150,000 for a couple, or $112,500 for a head of household. Families with incomes above those thresholds could also be eligible, just not for the full amount since the credit phases out. To get the benefits for the 2021 tax year, dependents have to be 17 or younger by the end of December. Adopted children and babies born in 2021 may qualify, too.
Qualifying families will automatically get 50% of their 2021 child tax credit amount through six advance monthly installments and can claim the other 50% on their taxes later. Or, they get the option of claiming 100% of the credit in 2022 if they unenroll from the monthly payment program. We'll break it all down for you below. Here's how to sign up for the IRS tools to manage your checks and how the child tax credit could affect your taxes next year. We have updated this story recently.
What are income and age caps for the child tax credit?
The IRS looks at your family's adjusted gross income, or AGI, the ages of your dependents and a handful of other things to determine if you meet the requirements for the child tax credit payments. Here's a quick look at family income and dependent age limits.
Income and age caps for the child tax credit
| Family upper-income qualification limit | Dependent age qualifications |
|---|---|
| Single filer -- AGI below $240,000 | Ages 5 and younger -- up to $3,600 |
| Head of household -- AGI below $240,000 | Ages 6 to 17 -- up to $3,000 |
| Couple filing jointly -- AGI below $440,000 | Age 18 -- $500 |
| Ages 19 to 24, full-time college students -- $500 |
What are the age requirements for dependents?
If your dependents are below the age of 6 on Dec. 31, 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. Later this year, parents will be able to update the IRS with their new dependent information in an online portal to receive the correct advance payments this year. Otherwise, parents can file a claim on their 2021 tax return next year.
If your dependents are age 6 or older on Dec. 31, you'll qualify for up to $3,000 per child over the next year, assuming again that you meet the income requirements. This includes your dependents who are 17 years old on Dec. 31. In prior years, 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.
2021 child tax credit age brackets
| Ages 5 and younger | Up to $3,600 each child, with half of credit as $300 monthly payments |
|---|---|
| Ages 6 to 17 | Up to $3,000 each child, with half credit as $250 monthly payments |
| Age 18 | $500 one-time check in 2022 |
| Ages 19 to 24, full-time college students | $500 one-time check in 2022 |
What are the income requirements per family?
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. Above $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.
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.
2021 child tax credit income limits
| 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 |
| Nonfiler | Will need to file a 2020 tax return to get the payment |
Watch this: Child tax credit: Everything we know
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Is the IRS letter only for eligible families?
Last month, the IRS started sending letters to 36 million families notifying them they may be eligible to receive monthly child tax credit payments, based on their federal income tax return from either 2019 or 2020. The IRS should also have details for eligible families that used an older IRS nonfilers tool to claim a stimulus check.
The IRS will soon send eligible families a second letter with a personalized estimate of their monthly payment.
Can non-tax-filing families get child tax credit payments?
Child tax credit payments will be automatic for those who filed their 2020 tax returns or claimed all their dependents on their 2019 tax return. If you don't normally file taxes, because your income is too low or you don't have a bank account or a permanent address, the IRS won't know to send you a payment.
That means if you're considered a nonfiler, you'll need to act now to be able to receive the first round of payments this year. The IRS opened a new online portal for households that don't traditionally file income taxes, so they can register their information. You'll need a number of things on hand before starting the process, including a mailing address, email address, tax information on your dependents and bank account information.
Or, if you were planning on filing a 2019 or 2020 return but just haven't gotten around to it yet, the IRS said to do so as soon as possible so your most recent information is on file for determining your payments.
Changes to the child tax credit this year increase the amount for low-income families.
Sarah Tew/CNETMore child tax credit eligibility requirements
- 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.
Here's what else to know about the 2021 child 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.
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