by Candice Davie

Good news!

This year, due to President Joe Biden’s $1.9 trillion coronavirus relief package (also known as the American Rescue Plan Act), families with children will see an increase in the amount normally received for the child tax credit. Also, with that boost is the option to receive monthly payments upfront for the next six months. 

The maximum enhanced child tax credit for 2021 is $3,600 for children younger than age 6 and $3,000 for those between 6 and 17.

Who qualifies?

Your modified adjusted gross income must be as follows:

  • Single filers –  $75,000 or below.
  • Married filing jointly  – $150,000 or below
  • Head of household filers – $112,500 or below. 

Other eligibility requirements include:

  • You must have provided at least half of the child’s support during the past year, and the child must have lived with you for at least half the year.
  • The child has to be 17 or younger on Dec. 31, 2021.

*Use this IRS tool to check eligibility. 

Here’s what you should know about the advance child tax credit payments: 

The American Rescue Plan Act of 2021 allows parents to receive monthly payments from July to December as an advance payment on their 2021 child tax credit. Here are some things to know:

  1. You can claim 100% of your 2021 child tax credit on your 2021 taxes, or you can get 50% of that amount in the monthly payments now and claim the other 50% on your taxes.
  2. Under the cash payment program, you get six monthly payments via direct deposit starting July 15 through December 2021. IYour most recent tax return will be used by the IRS to determine whether your eligibility.
  3. Those who do not normally file a tax return can use the IRS’ non-filers sign-up tool to sign up for the monthly advance child tax credit payments.
  4. You can opt out of the upfront payments via the IRS’ Child Tax Credit Update portal.

Featured Photo by Joice Kelly on Unsplash

Taxes

FILED IN:

SHARE ON:

You said:

Leave a Reply

Your email address will not be published. Required fields are marked *

Leave a Comment

Created by nationally recognized millennial money expert Tonya Rapley, My Fab Finance is a leading financial education and lifestyle blog for millennials who want to become financially free and do more of what they love.