The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March. In June, the IRS sent letters to families who may be eligible based on information they included in either their 2019 or 2020 federal income tax return or who used the Non-Filers tool on IRS.gov last year to register for an Economic Impact Payment.
The full benefit of the Child Tax Credit is now $300 per month per child under age 6 and $250 for each child age 6 to 17.
Families who are eligible for advance Child Tax Credit payments based on information the IRS has will receive a second, personalized letter listing an estimate of their monthly payment, which begins July 15.
Even families that have not filed taxes with the IRS may be eligible, but they will not receive a letter. Families who have not filed taxes must apply online (see link below) – to avoid missing out on any monthly payments, apply by July 15, 2021.
- If you were not required to file taxes for 2019 or 2020, TAKE ACTION NOW by filling out the IRS form for ‘non-filers’: https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool
- Free support for filing taxes: GetYourRefund.Org for those who were required to file taxes, but did not. (GetYourRefund.org is a non-profit service built by Code for America in partnership with IRS-certified Volunteer Income Tax Assistance (VITA) sites nationally)
Kids in nearly 90% of WA households will receive the credit.
Special scenarios for foster parents
- You had qualifying children last year and do not have qualifying children this year, or have fewer qualifying children
- it doesn’t matter if they are the same children, only the number of kids and their ages
- because we are more than halfway through the year, any kids not yet in your house will not be qualifying children unless they are babies born this year
- if you have fewer children because one child got too old, the IRS should have taken this into account already
You may want to opt out of the payments so you don’t owe money. Or, you can wait a couple months and change the number of qualifying children you have through the IRS portal. If your income is under $40,000 in 2021 (or $60,000 if filing jointly), you will not have to return any extra monthly payments you received because the number of children in your home went down.
2. You filed a 2020 tax return and now you have more qualifying children in 2021
You have to wait until the IRS updates their portal so you can change the number of qualifying children you have. If you don’t update this in the portal, you will receive the full amount of the credit with your tax return in 2022.
Learn more and find resources to help you fill out your form at ChildTaxCredit.gov
Child Tax Credit explanation and FAQ
What to expect?
- Larger payments: $3600 per year for kids 5 and under, $3000 per year for kids aged 6-17
- Full payment for parents with low or no income
- Monthly payments beginning in July
Who is eligible?
You qualify if you have
- A Social Security number or ITIN
- A qualifying child: aged 17 or under who has lived with you for at least half of 2020, has a SSN and is not claimed by another adult
- Income less than $240,000
How do I make sure I get it?
file taxes for 2020 or 2019
fill out this IRS signup form: https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool
When will I receive it?
- Monthly payments will begin July 15, by direct deposit or check in the mail (The IRS will issue advance Child Tax Credit payments on July 15, August 13, September 15, October 15, November 15 and December 15.)
- The other half of the credit (for January – June 2021) will be paid at tax time in 2022
Will this affect my benefits?
Child Tax Credit payments will not affect other benefits such as Medicaid, SNAP, TANF, Section 8
What if I don’t want advance monthly payments?
You can use the IRS portal at https://www.irs.gov/credits-deductions/child-tax-credit-update-portal to update your information – currently you can only opt out of the monthly advance payments completely, and update your bank details (this will not take effect until August). Eventually the tool will let you change the number of children you are receiving the credit for, update your income, etc.
If you think you will get payments now that you will have to pay back in your 2022 tax return, right now you can
a) opt out of monthly payments completely on the IRS portal
b) continue receiving the payments and put the money in a bank account ready to pay back
Could I really have to pay it back!?
Maybe. The IRS has a special repayment protection plan for families with an income below $40,000 ($60,000 for married filing jointly) – if you are low income, and they gave you advance monthly payments for children that you had in your last tax return but do not have in 2021, they will not require those payments to be returned. In any other situation, the amount will be added to your taxes owed when calculating your 2022 tax return.
See more information on the IRS site at https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-h-reconciling-your-advance-child-tax-credit-payments-on-your-2021-tax-return