With the passage of the American Rescue Plan in March, many families will begin to receive advance Child Tax Credit payments this summer.
The law includes a one-year expansion that increases the credit amount and distributes half the money in six monthly payments starting July 15—$250 for children between ages 6 and 17 and $300 for children under age 6.
To qualify for advance Child Tax Credit payments, you (and your spouse, if you filed a joint tax return) must have:
- A qualifying child who has a valid Social Security number and is under age 18 at the end of 2021.
- A main home in the United States for more than half the year.
- Made less than certain income limits.
Payments will be made in the same way tax refunds were provided for 2020 or 2019 returns or based on information to federal agencies that provide benefits, such as the Social Security Administration or Department of Veterans Affairs.
If the IRS has received your banking information, your payment will be sent to you as a direct deposit. Otherwise, payments will be made by mail. Payments made via direct deposit may begin appearing as pending deposits before the payment date each month.
If you aren’t required to file a tax return and haven’t provided your information to the IRS, you can do so through this sign-up tool on the IRS website.
Should you unenroll?
The monthly payments are an advance of the Child Tax Credit that parents would normally get when filing a 2021 tax return. Because these credits are paid in advance, every dollar you receive will reduce the amount of Child Tax Credit you claim on your 2021 tax return. This means the amount of your refund may be reduced or the amount of tax you owe may increase.
You may avoid owing tax to the IRS if you unenroll from receiving the advance Child Tax Credit payment and claim the entire credit when you file your 2021 tax return. Visit the IRS’ Child Tax Credit Update Portal (CTC UP) to unenroll; you must unenroll three days before the first Thursday of the next month by 11:59 p.m. Eastern Time.
Keep in mind that unenrolling applies to the individual only. If you are married and filing jointly, both you and your spouse need to unenroll. More functionality will be added to this portal later this year, allowing you to update your mailing address, bank account information, the number of qualifying children, as well as report a change in marital status or income.
Watch for scams
Scammers may try to use these payments to steal personal information or money. Remember, the IRS will not contact you by email, text message, or social media to request personal or financial information. Do not click on links or open attachments in emails claiming to have special information about the advance Child Tax Credit.