Advance Payments of the Child Tax Credit



For information related to filing timeframes for extended 2020 income tax returns, click here.


Advance Payments of The Child Tax Credit

If you are an American taxpayer with dependent children under the age of 17, you have probably previously seen or considered the Child Tax Credit on your annual income tax return in the past. The Child Tax Credit was established in 1997 and was originally a $400 per-child credit, non-refundable for most families. In 1998 the credit was increased to $500 before being made refundable in 2001. In 2012, the credit increased from $500 to $1,000 per child. The amount was doubled again in the 2017 Tax Cuts and Jobs Act. Income thresholds and the refundable amount of the credit have varied over time. 

There are major changes to the Child Tax Credit in 2021

The first major change is to the amount of the credit, which is increased to $3,600 per child under 6 and $3,000 per child from ages 6 to 17. If the credit is more than your tax, the excess amount is refunded. There is no cap on the number of children who may qualify for this credit.

The second major change is that for the first time, in 2021 the IRS will send a portion of your credit early. Via a series of checks or direct deposits from July through December, taxpayers will receive 50% of their expected credit amount in six installments. The remainder of the credit will be factored into 2021 income tax returns filed next year. Credits begin to phase out at $112,500 of income for single filers and $150,000 for married couples. 

The Tax Policy Center estimates that 92% of families with children will receive an average of $4,380 in 2021. Under prior law, 89% of families with children received an average Child Tax Credit of $2,310 (source: https://www.taxpolicycenter.org/briefing-book/what-child-tax-credit). 

In 2022, the Child Tax Credit is set to revert to pre-2021 levels. 

Taxpayers who prefer to opt out of Advance Payments of the Child Tax Credit, preferring instead keep their entire credit available until tax time, may unenroll from advance payments via the IRS website (see link below). This strategy may prevent unexpected balances due at tax time in certain situations, resulting from receiving the Child Tax Credit early and thus having fewer credits to reduce tax liabilities.

To take the following actions, please click here:
  • To unenroll from Advance Payments of the Child Tax Credit
  • To provide the IRS with important information if you do not file an income tax return
  • To review other Frequently Asked Questions
*We expect the IRS to provide a portal through which taxpayers can report new dependents and update bank account information, but at the time of this writing, such a portal is not yet available. 


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