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What is the Advance Child Tax Credit?
The Child Tax Credit (CTC) started in 1997 and was intended to help families afford the expense of raising children. In the past, this was done by allowing parents and caregivers to subtract a tax credit from their income taxes. The only families eligible were those who made enough money to need to file taxes, but that has changed.
The American Rescue Plan revised the Child Tax Credit this year to expand eligibility to include families who do not make enough money to file taxes.
This change allows families to receive a one-time Advance Child Tax Credit of $500 for dependent children aged 18, and for dependent children aged 19-24 who are attending school full time, as well.
The IRS will start releasing the monthly payments as of July 15, 2021 and send one payment every month through December 2021 to qualifying families. So it is important to get your information to the IRS as soon as you can; and before July 15th, 2021.
Who Qualifies for the Advance Child Tax Credit?
If you are expecting a baby to be born before December 31, 2021, the baby will qualify for up to $3,600. Adopted children who are U.S. citizens qualify as well.
The IRS states that a family can qualify if they:
- Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return; or
- Gave the IRS information to receive the Economic Impact Payment using the Non-Filers online tool, and
- Has a main home in the United States for more than half the year (the 50 states and the District of Columbia) or the family filed a joint return with a spouse who has a main home in the United States for more than half the year, and
- Includes a qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number or has dependent children aged 18, or dependent children aged 19 to 24 who are attending school full time, and
- Made less than certain income limits.
For residents of Puerto Rico:
Families will not receive an advance Child Tax Credit payment, but residents may be eligible to claim the Child Tax Credit for their qualifying children on a 2021 Form 1040-PR or a 2021 Form 1040-SS.
For residents of American Samoa, U.S. Virgin Islands, Guam, or the Commonwealth of the Northern Mariana Islands:
The IRS states that families may be eligible for Advance Child Tax Credit payments with their U.S. territory tax agency. Contact your local territory tax agency for additional information about any advance payments and other changes to the Child Tax Credit.
How Do I Get the Advance Child Tax Credit?
For families that did not file taxes, the IRS created an online sign up tool called the Non-filer Sign-up Tool. Families who did not file a 2020 tax return can use this tool to add information so the IRS may qualify the family to receive the Child Tax Credit.
You should use the Non-filer Sign-Up tool if you are not required to file income taxes and you have not already submitted your basic information to the IRS.
If you have one qualifying child and earned less than $24,800 as a married couple or $18,650 as Head of Household, or $12,400 as a single filer, you should use the IRS Non-Filer Sign-Up tool. If you missed any of the stimulus check payments, adding your information via the Child Tax Credit Non-Filer Sign-Up tool could also help you get those missed payments.
You can use the Non-Filer Sign-Up tool here.
You will need to have the following information ready before you start:
- Social Security Numbers (or ITINs) for you, your children, and your spouse.
- A reliable mailing address.
- A valid email address.
- Your bank account information (if you want to receive your payment by direct deposit).
How Much I Will Receive?
As with many government programs, calculation of Child Tax Credit payments is a little complicated, but here are the general payouts:
- For every qualifying child that is five years old or younger in your family, you will receive up to $1800 in six $300 monthly payments (July through December).
- For every qualifying child between the ages of six and seventeen you will receive up to $1,500 in six $250 monthly payments (July through December).
- Dependent eighteen-year-old children can qualify for a one time payment up to $500 each toward the Child Tax Credit amount a family may receive.
- Dependent children ages nineteen through twenty-four, who are attending college full-time, may qualify for a one time payment of up to $500 each.
More information can be found on the White House webpage information here.
When Do I Need to Sign Up?
Monthly payments will begin to get paid on July 15, 202. There are less than four weeks before the first checks are disbursed, so if you haven’t signed up already or filed 2019 or 2020 income taxes, it is encouraged to sign up now.