Taxpayers who have qualifying children under the age 18 at the end of 2021 can now get the full credit if they have little or no income from a job, business, or other source. Prior to 2021, the credit was worth up to $2,000 per qualifying child, with refundable portion limited to $1,400 per child. It has been increased to as much as $3,000 per child ages 6 – 17 at the end of 2021, and $3,600 per child ages 5 and under at the end of 2021.
The maximum credit is available to taxpayers with a Modified AGI of:
- $75,000 or less for Single and Marries Filing Separate filers
- $112,500 or less for Head of Household filers
- $150,000 or less for Married Filing Joint filers
From July 15 through December 2021, the IRS will advance 50% of the 2021 child tax credit in monthly payments to eligible taxpayers. The monthly payment will be estimated from their 2020 tax returns. The remaining amount will be claimed on their 2021 income tax return.
If you did not file a tax return during 2020 you can use this tool to report qualifying children for 2020 non-filers: https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool
Taxpayers may elect to opt-out from the monthly child tax credit payments to receive a large payment next year instead of seven smaller payments. This could be the case for families saving up for a big expense or those who have budgeted for that money to pay off outstanding debt. Also, your household circumstances or tax situation will change and don’t want to deal with having to update your information in the portal.
Taxpayers may opt-out use the Child Tax Credit Update Portal by July 1.