Advance Child Tax Credit

President Biden increased the Child Tax Credit (which is currently 2,000 per child age 17 and under) to $3,000 for children over the age of 6 and $3,600 for children under the age of 6.

 

He also decided to “advance” half of this credit starting with monthly payments that begin on July 15th. If you chose to receive these payments, then you will receive $250/month per kid over the age of 6 and $300/month per kid under the age of 6. These payments will continue until December, then you will receive the other half of the credit like normal when you file your 2021 tax return, it’ll just be included in your refund. The advance will be based on your 2020 tax return, so whichever children you claimed, you will receive the advance for. If you haven’t filed 2020, then it will go by the 2019 tax return instead.

 

BUT, you can chose to un-enroll from these payments if you’d rather receive the entire credit when you file your 2021 tax return (which may save you a lot of headaches). In order to do this, you need to follow this link and create an account to un-enroll. The website will walk you through all of it. If you are married and chose to un-enroll, BOTH spouses will have to create an account and un-enroll on the IRS website.  We have found that the process to un-enroll has been made unnecessarily difficult. The IRS site will ask for a lot of very personal information. It seems to be the only way to get this done though.

Mother and Son

The IRS has now updated their website for you to be able to check your direct deposit on file to make sure it is accurate. Definitely take the time to double check what they have on file is correct.

 

If you chose to enroll in these monthly payments, you need to make sure you keep track of what you receive each month since you will have to claim the remainder on your 2021 tax return. If you chose to un-enroll, then you’ll just take the full credit as you normally would.

 

There is an income cutoff (similar to the stimulus payments) for the credit. The credit will begin to “phase out” if you are over the income limit, but you will still receive the $2,000 Child Tax Credit even if the “advance credit” phases all the way out.

 

The IRS website (linked below) is FULL of multiple FAQ sections that can answer most any question that you may have.

 

This is the first time in history something like this has ever been done, so please keep in mind: something will go wrong, the IRS WILL make mistakes, and customer service is going to be EXTREMELY hard to get in contact with. Therefore, if you are considering un-enrolling and just taking the full credit during tax season, we also think that is best idea. Please share this information with friends, family, coworkers, etc. to get the word out.

 

If you do NOT un-enroll on the website, you WILL receive payments starting this month.

 

Again, these payments are NOT taxable. They're merely an early advance of the credit you're due to receive next year.

More from the IRS Website:

https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021