Under the American Rescue Plan (ARPA), millions of families will receive advance Child Tax Credit (CTC) payments of up to $300 per month per child under age 6 and $250 per month per child ages 6 through 17.
This is not a new credit, although it has been increased by the American Rescue Plan. Taxpayers are getting a monthly advance on child tax credits that they would normally get by filing their income tax returns.
These advance CTC payments will begin July 15, 2021. After that, payments will be disbursed on a monthly basis through December 2021. (IRS News Release IR-2021-129).
- 1 What do you need to get the payment?
- 2 Who is eligible for advance child tax credit payments?
- 3 Are the advance Child Tax Credit payments taxable?
- 4 Will advance Child Tax Credit payments affect other government benefits that you receive
- 5 Will the IRS send you a letter about the advance CTC payments before you begin to receive them?
- 6 Avoiding scams
What do you need to get the payment?
The following groups of people do not need to do anything per the IRS’ website:
- You filed your 2019 or 2020 tax return and claimed all dependents.
- If you used the IRS Non-filers tool last year to register for Economic Impact Payments and claimed all dependents.
Most people will not need to do anything.
Those who have not claimed all dependents on their 2019 or 2020 tax returns, or through the IRS Non-filers Sign-Up tool for the EIP, will now need to use the Non-filer Sign-up tool for the advance CTC payments. Visit the IRS’ Non-filers Sign-Up tool
Who is eligible for advance child tax credit payments?
To qualify for the advance CTC payments, you must:
- Have a qualifying child
- You or your spouse, if married filing a joint return, must have your main home in one of the 50 states or the District of Columbia for more than half the year.
Phase out of the Advance CTC
All taxpayers with adjusted gross incomes less than the following will qualify for the full payment:
- $75,000 for single taxpayers
- $112,500 for head of households
- $150,000 for married taxpayers
Those with gross incomes above that will have a phase out of $50 in credit for every $1,000 in income over the threshold amount.
Are the advance Child Tax Credit payments taxable?
Per the IRS, “No. Advance Child Tax Credit payments are not income and will not be reported as income on your 2021 tax return. Advance Child Tax Credit payments are advance payments of your tax year 2021 Child Tax Credit.”
Will advance Child Tax Credit payments affect other government benefits that you receive
Per the IRS, “No. Advance Child Tax Credit payments cannot be counted as income when determining if you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds.”
Will the IRS send you a letter about the advance CTC payments before you begin to receive them?
Per the IRS, “Yes. In June, the IRS will send you Letter 6417. This letter will inform you of the amount of your estimated Child Tax Credit monthly payments.”
The IRS states that “it urges everyone to be on the lookout for scam artists trying to use advance Child Tax Credit payments as a cover for schemes to steal personal information and money. The IRS doesn’t initiate contact by email, text messages, or social media channels to request personal or financial information – even information related to advance Child Tax Credit payments. Also, watch out for emails with attachments or links claiming to have special information about advance Child Tax Credit payments or refunds of the Child Tax Credit.”