It costs money to provide for a child’s needs and the pandemic has just presented additional challenges. Thankfully the IRS knows this and gives eligible taxpayers a credit on their income tax return for claiming a child.
The credit is $3,000 for each child between the ages of 6 and 16 years old and $3,600 for each child under 6.
The American Rescue Plan increased this amount in 2020 and also allowed for an advance of the credit to be received in 2021 (more on this in a moment).
The other nice thing is that the child tax credit is refundable. A refundable credit is a credit that can be taken whether or not you have income. If the credit reduces your taxable income below zero you receive a refund for the excess.
Do I Qualify for the Child Tax Credit?
Not everyone can take advantage of the child tax credit. The credit gets reduced to $2,000 if you’re married filing jointly and your modified adjusted gross income is $150,000. When you file jointly and earn above $400,000 the credit phases out by $50 for every $1,000 of income. If you file single, head of household or married filing separately the credit phases out when your modified adjusted gross income goes over $200,000.
What is the Advanced Child Tax Credit?
The advanced child tax credit is just that, an advance of the credit you would normally take on your tax return for 2021. An advance of the child tax credit will allow you to receive half of the credit via check or direct deposit. The remaining credit would be taken on you 2021 tax return.
When Will I Get the Advanced Child Tax Credit?
The IRS started sending the advanced child tax credit payments on July 15. Payments will continue each month through the end of 2021. If the IRS has your bank account information you may receive the advances through direct deposit. If not a check will be mailed to you.
To check the status of your payments or update your banking information you can use the Child Tax Credit Portal.