Frequently Asked Questions (FAQ): Advance Child Tax Credit

In March 2021, the American Rescue Plan Act (ARPA) was signed into law.  This included changes to how families receive their Child Tax Credit (CTC). 

The CTC is a tax credit of up to $2,000 per child included on your annual tax return filing.  With the new changes, families can receive half of the normal credit via monthly payments instead of having to wait until year end to receive it.  The CTC was also increased for 2021 to $3,600 for children under the age of 6 and $3,000 for children between ages 6-17. 

Do I qualify for the Advance CTC?

The credit is based on your most recently filed tax return.  If you qualified for the CTC on your previous return, you will be automatically enrolled to receive the credit in advance.  If you choose to receive half of the credit in advance, this will reduce the credit you would have normally received when you file your 2021 tax return.

Do I have to take the advanced payments?

No.  The Internal Revenue Service (IRS) has added an option to opt-out of receiving advanced payments.  To opt-out of advanced payments, click here.

How long will the child tax credit increase last?

Monthly payments will be made through 2021.  Under current law, the increased child tax credit of $1,000 for children ages 6-17 and $1,600 for children five and under is only through 2021.  However, there is currently a proposal to extend the additional amounts paid through 2025. 

Who is not eligible for the increased tax credit?

The extra credits of $1,600 and $1,000 start phasing out once you hit a certain income level.  For married couples, this starts to phase out when household income reaches $150,000. For those using the Head of Household filing status, this will start to phase out once household income reaches $112,500.

Where can I find more information on the Advance CTC?

Both the IRS and the Biden administration have an entire section of its website devoted to more information about the new CTC.

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

https://www.whitehouse.gov/child-tax-credit/

Please contact a tax professional if you have any questions about how the new CTC applies to you and your specific tax situation.