What to Know about the Advance Child Tax Credit Payments

Child Tax Credit

posted on Friday, June 25, 2021 in Announcements

Many families will soon start receiving monthly payments through the end of the year, thanks to an enhanced Child Tax Credit. 

The tax credit is intended to help you support your family. It reduces your tax liability or the amount you pay in taxes, for each qualifying child younger than 18.

The American Rescue Plan, signed into law in March, temporarily increased the credit and makes part of the payments available early to help families dealing with the lingering impact of the COVID-19 pandemic.

Child Tax Credit FAQ's

  •  How has the Child Tax Credit changed in 2021?

    The Child Tax Credit (CTC) is nothing new to many parents—they claim it every year on their taxes. However, the American Rescue Plan includes several temporary changes to the Child Tax Credit. 

    • The size of the tax credit was expanded, so families get a much bigger credit this year.
    • The credit is now fully refundable, so you don’t need to make a minimum income to qualify.
    • There are six months of payment advances that parents can receive, which start July 15.
  •  How do I know if I qualify for the Advance Child Tax Credit?

    Qualifying for the Advance Child Tax Credit depends on three things:

    1. Your income
    2. Having a qualifying child dependent in your household
    3. Have a main home in the United States for more than half the year or file a joint return with a spouse whose main home is in the United States for more than half the year.

    For income, there is no minimum income required to qualify for the CTC or the advance payments. You can qualify even if you are unemployed, on Social Security, or receive no income. There are income limits, however:

    • Married couples filing jointly can make no more than $150,000 per year to qualify
    • People that files taxes as Head of Household must make less than $112,500
    • All other tax filing statuses must make less than $75,000 to qualify

    The second factor is to have a qualifying child dependent in your household. There are eight criteria that a child needs to meet:

    1. The child is a U.S. citizen, national, or resident alien.
    2. They have a valid Social Security number.
    3. The child is age 17 or younger in 2021; for the $3,600 CTC, the child must be age 6 or younger in 2021.
    4. The child is your son, daughter, stepchild, foster child, grandchild, niece, or nephew.
    5. They will live with you for more than half the year in 2021.
    6. The child will not provide more than half of his or her own support in 2021.
    7. The child does not file a joint tax return.
    8. You will claim the child as your dependent on your 2021 tax returns.
  •  How will the IRS determine who is eligible for Advance Child Tax Credit payments?

    The primary way that the IRS is determining who is eligible is based on income tax returns. If you filed your 2020 tax returns and your income falls below the limits listed in the previous question, you qualify automatically. If you haven’t filed your 2020 tax returns, the IRS will also use 2019 tax returns.

    If you do not file taxes, the IRS has set up a non-filers tool that you can use to sign up for the advance payments. Parents and guardians who are on Social Security or who don’t make enough income to file taxes can use this tool to ensure they will receive their first payment on time on July 15.

  •  How much money will I get from the Child Tax Credit in 2021?

    This depends on the age of the child dependents living in your home. Families receive:

    • $3,000 for each child dependent age 6-17
    • $3,600 for each child dependent under age 6

    In previous years, the CTC was $2,000 for any child dependent under the age of 17. So, this is a sizable increase, especially for parents with young children in the home.

    The advance payments will be half of the total child tax credit that parents and guardians are eligible to receive. So, if you have one child aged 10 in the household, you will receive $1,500 total in advances or $250 per month. If you have a child aged 5, you would receive $1,800 or $300 per month.

  •  Can I decline the advance payments of the 2021 Child Tax Credit?

    Eligible taxpayers who do not want advance payments of the 2021 Child Tax Credit can choose not to receive them. This choice may apply to taxpayers who anticipate earning more in 2021 than in 2020 or who have primary custody of the child(ren) receiving the credit in 2020, but not in 2021. To unenroll from the Advance Child Tax Credit payments, click here.

  •  When will the Advance Child Tax Credit payments arrive?

    The IRS will issue the advance payments, either by direct deposit or check, on these dates in 2021:

    • July. 15
    • Aug. 13
    • Sept. 15
    • Oct. 15
    • Nov. 15
    • Dec. 15

    If you have direct deposit, the payment should show up as pending in your bank account on that date. If the IRS does not have your bank information, you will have to wait for a paper check in the mail. 

  •  Do I need to prepare for my payment?

    The IRS said that you don’t need to take any action now other than file your 2020 tax return if you haven’t already done so.

    The IRS will automatically determine your eligibility and issue advance payments based on the information you provide.

    In the next few weeks, the IRS will also offer other online tools to ensure you receive the correct amount as quickly as possible. You’ll be able to update:

    • Changes in your income, filing status or the number of qualifying children.
    • Direct deposit information.
  •  How do I know if the payment is legit?

    When money from the government is in the news, scammers pay attention too.

    They might call, email, text or DM you. They might “offer” to help you get your payments earlier, get you more money or tell you other lies, warned the Federal Trade Commission.

    The FTC also offered these reminders:

    • Only the IRS will send these payments.
    • The government will NEVER call, text, email or DM you out of the blue, asking for money or information.
    • Nobody legit will ever demand that you pay by gift card or wire money.
  •  How do I know when the Advance Child Tax Credit Payments will be in my C1st account?

    Did you know you can set up customizable alerts in Digital Banking? Here is how to create an alert: 

    • Sign in to Digital Banking via c1stcu.com or download our mobile app by searching ‘Community 1st CU’
    • Select Settings, then Alerts
    • Select New Alert, then History Alerts
    • Under Transaction Type, select Description box 
    • Enter “IRS” as the description to be notified when the payment hits your account. 
    • Select Account and Alert Delivery Method
    • Agree To Terms (if selecting text message delivery) and click Create Alert