2021 Child Tax Credit Stimulus Payments: How much will I get and when?
By now, millions of American families have received monthly advance Child Tax Credit payments, which will continue into December. You may think you’re all set knowing how much you’ll get each month. But how will the Child Tax Credit changes affect your 2021 tax return? And, should you be doing something now with your Form W-4 to account for these changes to avoid a surprise at tax time?
In this post, we’ll cover everything you need to know:
- Child Tax Credit: Changes and impacts (including potential W-4 updates)
- New 2021 Child Tax Credit and advance payment details
- How to make changes with the IRS
- Frequently asked questions
Child Tax Credit: Changes and impacts
As part of changes from the March 2021 stimulus bill, the value of the credit as well as the age limit have increased. The CTC is now fully refundable, which means you can receive the credit even if you don’t owe the IRS.
Specifically, half of the credit will be distributed in advance of the 2022 filing season (when you’d file your 2021 return). In fact, nearly 90% of children in the U.S. will be covered by advance payments of the credit according to the IRS.
With news of the advance Child Tax Credit stimulus payments comes questions: How much will we get? When will the Child Tax Credit advance payments be sent? Where will our money go and how do we update our information? You’ll find those answers and more, including those for Emerald Card holders, here.
Before we jump into the details, let’s cover the W-4 question. As you may know, your Form W-4 withholding determines how much of your tax is paid with each paycheck. Because the advance payments could decrease the credit claimed on the tax return, the IRS has stated the following . . .
Those who received a small refund or had a balance due when they filed their 2020 tax return should consider one of the following options:
- unenrolling from advance Child Tax Credit payments,
- updating their Form W-4 by entering an additional amount to be withheld each pay period on step 4c of the form, or
- making quarterly estimated tax payments for the remainder of 2021.
Need to update your W-4? Our tool creates a new W-4 for you – ready to sign and hand-off to your employer. To get started, enter your information, including your anticipated advance Child Tax Credit amount, into our W-4 calculator.
Tax prep tip: In January 2022, the IRS will send you Letter 6419 to report your total amount of advance Child Tax Credit payments. Be sure to keep it so you can refer to it when you file your return.
New 2021 Child Tax Credit and advance payment details
Child Tax Credit amounts will be different for each family
- Your amount changes based on the age of your children. The payment for children:
- Ages five and younger is up to $3,600 in total (up to $300 in advance monthly)
- Ages six to 17 is up to $3,000 in total (up to $250 in advance monthly)
- Your amount changes based on your income. You’re eligible for the full amount if your Modified Adjusted Gross Income is under:
- $150,000 for Married Filing Jointly or Qualified Widow(er)s
- $112,500 for head of household filers, and
- $75,000 for single and Married Filing Separate
A portion of your amount is reduced (“phases out”) by $50 for every $1,000 over the limits listed above.
Child Tax Credit calculator: Use our Child Tax Credit calculator to estimate how much of the credit you can expect monthly and when you file your return next year.
Advance payments for the Child Tax Credit started July 15
The first payments were sent by direct deposit on July 15, 2021. Then, they’ll continue monthly on the 15th of each month unless the 15th falls on a weekend or holiday. For those receiving checks, they’ll be mailed around the same time.
Your last tax return generally determines where your payment will be sent
For most people, it will go to the bank account where you received your 2020 refund (or 2019 if that’s the last time you filed). Or, it will be sent to the physical address on your return if there wasn’t a bank account tied to your filing.
For eligible H&R Block Emerald Card holders, the money will be sent to your card if that’s where you received your most recent refund. You should make sure you have your Emerald Card handy. If you need a new card, please call 1-866-353-1266.
H&R Block Emerald Prepaid Mastercard® is issued by MetaBank®, N.A., Member FDIC, pursuant to license by Mastercard International Incorporated. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated. Additional fees, terms and conditions apply; consult your Cardholder Agreement for details.
Some August payments sent via check vs. direct deposit
The IRS shared that certain taxpayers who received their July payment by direct deposit will receive their August CTC payment by check in the mail. To see if this applies to you, you can log in to the IRS portal and confirm how your August payment was sent.
The IRS expects this is a one-time issue and you should receive future monthly payments direct deposited in the bank account the IRS has on file.
Those who haven’t filed or have no income are still eligible
The good news is that families don’t have to have income or a filing requirement to be eligible. The IRS has stated that anyone not required to file can file a simplified return to provide their information to the IRS. To do this, you can use H&R Block Free Online to file a simplified return for free. Or, visit the IRS’ Child Tax Credit site for more information.
Additionally, your child is eligible if they have a Social Security number even if you don’t have one yourself (i.e. you have an ITIN).
Most people don’t have to do anything to get the advance payments
Nothing is required by the IRS to get the payments for most people – they’ll be automatic if you’ve filed a 2020 or 2019 tax return. If you have updates to your personal information or want to opt out, you’ll need to take action. We’ll explain more below.
Your last return is also the basis for your CTC calculation
The IRS will use your 2020 (or 2019) tax return details — meaning your income and dependent information — to estimate your amount for the advanced Child Tax Credit.
Advance Child Tax Credit payments: How to make changes with the IRS
The IRS has created an online portal to allow families to make changes to the information on-hand. Review the table below to see what you can do in the tool and when.
Additionally, the IRS now offers a CTC Help Line you can call to unenroll from payments: 800-908-4184. The Help Line is available Mondays through Fridays (except holidays) from 7 a.m. to 10 p.m. Eastern.
Please note: You’ll need to set up access before you can make any changes in the portal. See the access instructions below.
Portal Functionality Rollout
|*Date you can make changes||What you can do|
|June 21||Find out if you’re eligible|
Unenroll from payments
See a list of your payments
|June 30||Add or update your bank information for your payments** (first effective for August)|
|August 20||Make changes to your address**|
|Late summer||Make changes to your dependents, marital status, and income|
Re-enroll if you previously unenrolled
*Dates subject to change.
**To continue getting combined payments with your spouse, you and your spouse must both update your information on the same day.
Visit the IRS’ website at http://www.irs.gov/childtaxcredit2021 for additional details and ongoing information updates.
Access the IRS CTC opt-out portal in one of two ways
Getting access to the portal requires you to verify your identity to protect your personal information. You’ll need either:
- an existing IRS.gov account or
- an ID.me account (the IRS’s new authorization system) to access the CTC opt-out portal.
To create a new ID.me account:
- Go to: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal
- Click Unenroll from Advance Payments
- Click ID.me Create New Account
- Follow the on-screen instructions to provide information to set up the secure ID.me account. Note that users may be asked to create a live video of themselves (using phone or webcam) and/or upload photo identification.
Once you’ve created an ID.me account, you can access the portal at the link directly above.
You can opt out of payments, if you prefer
If you prefer to receive your full Child Tax Credit when you file in 2022, you can use the IRS portal to opt out of future payments. You can opt out at any time before Dec. 15 — even if you’ve already received earlier payments. See the FAQs below for information on opt-out deadlines.
There are two reasons you may wish to opt out:
- You prefer to receive the full CTC when you file your 2021 tax return, or
- Your income or family situation has changed since last year, and you may be liable for repaying some or all of the advanced payments.
Depending on your situation, opting out could help you avoid receiving payments that may need to be paid back. See our FAQs below.
- Both spouses must unenroll separately if you use the Married Filing Jointly status. If only one spouse unenrolls, you’ll receive half of the payment.
- You can’t re-enroll at this time, but the IRS expects that functionality to be ready in late September 2021.
New 2021 Child Tax Credit and Advance Payment FAQs
What is the deadline to unenroll or make changes?
If you want to stop your advance payments or make any changes (based on the Portal Functionality Rollout table above), you’ll need to update your elections three days before the first Thursday of the next month by 11:59 p.m. Eastern. If you miss that cutoff, your existing elections will still apply, and you may still receive the next scheduled payment. You do not need to unenroll for each payment individually.
|Payment month||Unenrollment deadline||Payment date|
I heard I might have to pay some of the credit back. What’s that about?
There are a few times that might happen:
- Your child is no longer your qualifying child, such as if they are no longer a dependent on your return.
- Your income increased in 2021 and you no longer qualify for the full amount.
- You alternate claiming your child with the other parent and should not have received the advance.
To avoid overpayment, you may consider using the IRS portal to opt out of payments.
Would everyone have to pay the money back?
If your income is below the following thresholds, you’re not required to repay up to $2,000 per qualifying child (i.e. the “safe harbor” amount).
- Single: $40,000
- Head of Household (HOH): $50,000
- Married Filing Jointly (MFJ): $60,000
The safe harbor is reduced for filers with income between:
- Single: $40,000 and $80,000
- HOH: $50,000 and $100,000
- MFJ: $60,000 and $120,000
If your income exceeds these thresholds, you will be responsible for repaying the full amount of any overpayment on your tax return.
What if I don’t want the Child Tax Credit in advance?
You can wait and get it all at tax time. You can opt out using the IRS portal mentioned above.
I alternate claiming my child with their other parent. How does this affect us?
It’s not entirely clear from the IRS if the parent who claimed the child on their 2020 return will receive the advance portion of the payments. As we learn more from the IRS and Treasury Department, we’ll update this answer.
What was the previous Child Tax Credit worth?
Previously, the CTC provided $2,000 for each qualifying child under the age of 17. In addition to the higher amounts mentioned above, children aged 17 are now eligible.
Is the Child Tax Credit subject to offsets?
Advance payments made under these new rules are not subject to offset for past due child support, federal tax debts, state tax debts, and collection of unemployment compensation debts. However, the amount claimed on the taxpayer’s 2021 return as a refund would generally be subject to offset.
What about residents of Puerto Rico and other U.S. territories?
The new law provides for payments to U.S. territories for the cost of the expanded Child Tax Credit, although the advance payments of the credit don’t apply.
For tax years after 2021, residents of Puerto Rico would be able to claim the refundable portion of the child tax credit even if they don’t have three or more qualifying children.
How long will this new Child Tax Credit be in place?
The American Rescue Plan only guarantees the increased amounts for the 2021 tax year, so unless Congress makes them permanent, they will revert in 2022 to the previous rules of $2,000 per child with up to $1,600 of that amount being refundable. Likewise, the advance payments will only apply to 2021.
Is the Child Tax Credit a loan?
No, the Child Tax Credit is not a loan. It is a refundable tax credit available to American children.
Additional questions about the new Child Tax Credit
As more details become available about the new Child Tax Credit and the advance payments, we understand that you’ll have more questions. H&R Block is committed to helping you understand the changes that affect your finances and will continue to update this page as we learn more.
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