Anyone that received the Child Tax Credit on their 2019 or 2020 return, whichever was most recently filed, is set to receive advance payments of their 2021 Child Tax Credit. Unlike the stimulus checks, if you receive more than you should, you will have to pay the excess back when your 2021 tax return is filed.
In general, if you have a child under 18 that you claim as a dependent and you make less than $400,000 for a married couple or $200,000 for a single individual, you qualify for the credit. There were new rules put in place for 2021 that allow those at a lower income level to get up to an additional $1,600 per child depending on the age of the child. The maximum credit is $3,600 per child. The advance payments you'll receive will be up to 50% of that amount ($1,800 per child) and will be spread over six months starting July 15th.
Right now, you are not able to update your information with the IRS to change your bank account, marital status, address, income amount, or number of dependents. If you've had any of these types of changes since your last return was filed or if you claim dependents in alternating years, you'll most likely want to opt out of the advance payments for now. By the end of September, the IRS anticipates taxpayers will be able to use the Portal to update all of this information. At that time, you will also be able to re-enroll in the advance payments.
Another item to consider is: do you normally get a refund or do you owe when your return is filed? If you normally owe, this will increase your tax bill next year. If you normally get a refund, this could significantly reduce it or even cause you to owe. If you'd like to read some of the Frequently Asked Questions on the IRS website regarding the advance payments, you can do that
here.
Don't forget! Both spouses need to complete the opt-out process. If only one spouse completes it, the other spouse will still receive 50% of the monthly payment.
