- Business Advocacy
This information was taken directly from the IRS website.
There have been important changes to the Child Tax Credit that will help many families receive advance payments starting this summer. The American Rescue Plan Act (ARPA) of 2021 expands the Child Tax Credit (CTC) for tax year 2021 only.
The expanded credit means:
For tax year 2021, families claiming the CTC for tax year 2021 will receive up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021. They will receive $3,600 per qualifying child under age 6 at the end of 2021. Under the prior law, the amount of the CTC was up to $2,000 per qualifying child under the age of 17 at the end of the year.
The increased amounts are reduced (phased out), for incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.
Advance payments of the 2021 Child Tax Credit will be made regularly from July through December to eligible taxpayers who have a main home in the United States for more than half the year. The total of the advance payments will be up to 50% of the Child Tax Credit. Advance payments will be estimated from information included in eligible taxpayers' 2020 tax returns (or their 2019 returns if the 2020 returns are not filed and processed yet).
Eligible taxpayers do not need to take any action now other than to file their 2020 tax return if they have not done so.
The IRS also urges community groups, non-profits, associations, education groups, and anyone else with connections to people with children to share this critical information about the CTC. The IRS will provide additional materials and information that can be easily shared by social media, e-mail, and other methods.
The IRS will provide more information about advance payments soon at www.irs.gov.
Mr. Aston can be reached at 626-282-1084.