(ABC4) – Shortly after taking office, President Joe Biden introduced the American Rescue Plan Act, which not only called for another round of stimulus payments, but the extension of the child tax credit.
While the tax credit has only been expanded for 2021, many families will start seeing advance payments this summer, according to the IRS.
What does the expanded credit mean?
According to the IRS, the credit amounts will increase for many taxpayers, with credit for qualifying children being fully refundable. So, even if you didn’t have earned income or don’t earn any income taxes, you can still benefit from the child tax credit.
The credit includes children who turn 17 in 2021. Additionally, you may receive part of the credit in 2021 before filing your 2021 tax return.
How much will you receive?
For the tax year 2021, if you claim the child tax credit, you will receive up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021, the IRS explains. For each qualifying child under the age of 6, you will receive $3,600 at the end of 2021.
Previously, the amount for the child tax credit was up to $2,000 for each qualifying child under the age of 17 at the end of the year.
The IRS reports that the increased amounts are reduced, or phased out, for incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.
When will advance payments be made?
According to the IRS, advance payments of the 2021 Child Tax Credit will be made regularly from July through December to eligible taxpayers who have a main home in the U.S. for more than half of the year.
The total advance payments will be up to 50% of the Child Tax Credit and payments will be estimated from information such as your 2020 tax returns, or 2019 returns if your most recent ones have yet to be filed and processed.
How to get your advance payments
If you haven’t already, the IRS urges you to file your 2020 tax returns as soon as possible to ensure you’re eligible for the appropriate amount of the child tax credit, as well as other tax credits you are eligible for.
Eligible taxpayers do not need to take any action now to receive the child tax credit advance payments, except filing their 2020 tax return.
If you do not want to receive advance payments of the child tax credit, you will have the option to decline receiving the payments, according to the IRS. You will also have the opportunity to update information about changes to your income, filing status, or the number of qualifying children.
The IRS is expected to release details on how to take these steps soon.
For more on the Child Tax Credit, visit the IRS.