Child Tax Credit for 2021

With the American Rescue Plan Act, the child tax credit was expanded effective only for 2021.

How much is the 2021 Child Tax Credit?

The amounts received for each child have been increased from prior years. For children under the age of 6, the credit is $3,600 and for children between the ages of 6 and 16, the credit is $3,000. The credit for dependents age 18 and up remains at $500.

What’s the income limit for the Child Tax Credit?

The full credit will be received for couples making less than $150,000, head of household filers making less than $112,500 and single parents filing separately making less than $75,000. There is a phase-out of the credit above these income levels.

How do I get the Child Tax Credit?

The IRS will automatically prepay half of the 2021 child tax credit to eligible taxpayers based on their 2019 or 2020 tax information (i.e. the last return filed). Taxpayers will begin to receive these monthly payments starting in July of 2021 and the payments will continue through December of 2021.

What else should I know about the 2021 Child Tax Credit?

If there has been a change of income or number of dependents since their last tax return, taxpayers can notify the IRS of these changes on the IRS website. This option will be listed under Advanced Child Tax Credit/Manage Advanced Payments. This page can also be used by a taxpayer to opt out of receiving these payments.

Keep in mind that this is a prepayment of a 2021 tax credit, so if a taxpayer opts not to take the advance payments, the full credit can still be claimed on their 2021 tax return. However, unlike the stimulus checks, if a taxpayer receives the prepayments of the child tax credit and they are not entitled to it, it will be owed back on their 2021 tax return.

More Insights

Taxing Matters

Understanding the 2024 IRS Inflation Adjustments: What You Should Know

As we enter the new year, we highlight key IRS inflation-adjustment changes for 2024. Here is what you need to know: The IRS has released inflation adjustments for over 60 tax provisions for the 2024 tax year.
Read more

Taxing Matters

Clarifications on the Massachusetts Estate Tax Amendments

On October 4, 2023, Massachusetts Governor, Maura Healey, enacted comprehensive tax legislation that will modify a wide range of Massachusetts tax laws, including those related to estate tax.
Read more

Up Next