COVID – Changes in Child Tax Credit


Important changes to the Child Tax Credit are helping many families get advance payments of the credit. If you have a child, another payment should be coming your way this month, and again in November, and in December.

The IRS pays half the total credit amount in advance monthly payments beginning July 15. You will claim the other half when you file your 2021 income tax return. These changes apply to tax year 2021 only. It is important to remember this when you file your 2021 taxes

To qualify for advance Child Tax Credit payments, you — and your spouse, if you filed a joint return — must have:
  • Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return; or
  • Given us 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
  • Made less than certain income limits.

The IRS will use information you provided earlier to determine if you qualify and automatically enroll you for advance payments. You do not need to take any additional action to get advance payments.

On July 15, many Washington families received the first of six monthly payments from the federal government as part of its newly augmented child tax credit. From now until December, eligible families can receive $300 per month for each child under 6 and $250 per month for each child between the ages of 6 and 17. These are occurring because of a COVID-19 relief package Congress passed in March.

What is the child tax credit?
The credit is a tax benefit meant to help American taxpayers support their families. In 2020, the most you could get from a child tax credit was $2,000 for each child under 17 years of age. In March, congress passed a $1.9 trillion COVID relief package known as the American Rescue Plan. It bumped the child tax credit’s value up from $2,000 to $3,600 for each child under 6 and $3,000 for each child between the ages of 6 and 17.

What about monthly payments?
Since the American Rescue Plan was meant to help families financially impacted by the pandemic — the thinking was that each element in a COVID relief package should benefit people while the pandemic is still raging — the federal government is allowing eligible families with children to receive monthly payments that will be subtracted from the value of the new child tax credit. Another difference is that the tax credit is now fully refundable.

Here’s how it works: Let’s say a family with one child under 6 qualifies for the $3,600 credit. They can elect to receive monthly payments of $300 from July to December. That means they’ll collect $1,800 (300 x 6 = 1,800) in monthly payments over the next six months. Then, come tax time next year, let’s say the family owes $200 in taxes. Since they have $1,800 of value left on their tax credit (3600 – 1800 = 1,800), they’ll receive a check for $1,600 (1800 – 200 = 1,600). The system would work the same way for a family with a child between the ages of 6 and 17, except the monthly payments would be $250 and the total tax credit value would be $3,000.

Eligible families can receive these tax credits for each child.
Families can choose to forgo the monthly payments altogether and collect the full value of their child text credit or credits during tax time next year. It’s too late to opt out of the July 15 payment, but you have until Aug. 2 to unenroll from the remaining monthly payments. That is the last opportunity you’ll have to opt out, so if you want to collect as much as you can in refunds next year, make sure to not miss the Aug. 2 deadline.

Is this increase permanent?
No, the new system will only be in use for this year.

Who qualifies for the full credit?
Joint filers who made less than $150,000 in 2020, or single filers who made less than $75,000 in 2020, are eligible for the full credit. Heads of household who made less than $125,000 in 2020 also qualify.

Taxpayers who make more than the threshold in their filing category can still receive a child tax credit, but it won’t be for the full amount. The value of the credit shrinks as you get into higher incomes and eventually drops to zero.

When do monthly payments arrive?
– Friday, August 13
– Wednesday, September 15
– Friday, October 15
– Monday, November 15
– Wednesday, December 15

If you did not (or do not) get payments on any of these dates, contact the IRS. 

How will I receive monthly payments?

Most payments will be made through direct deposit. The IRS will use the banking information it has on file from the latest tax season. Those not enrolled for direct deposit will receive a check, which could delay the arrival of the payments. If you’ve changed banks since the last tax season, you can update your direct deposit information here.

For more information:
You can find more information, check eligibility and unenroll from monthly payments on the IRS website.  Go to 

(Attribution: IRS web site, Alec Regimbal for content)

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