So, there are a few things we need to clear up about the 2021 advance Child Tax Credit.
You see, we recently published a post talking about the Child Tax Credit and there were still a ton of questions left by parents in the comments, and we wanted to address them in this post.
Most of you will receive the credit, some will receive a reduced version of the credit, and some won’t receive it at all.
So read until the end to get the answers you need!
Because in today’s post, we will be answering the most frequently asked questions regarding the 2021 advance Child Care Tax Credit.
We’ll start with basic questions that lead into more advanced questions as the post progresses.
17 Advance Child Tax Credit FAQs & Answers
Advance Child Tax Credit FAQs #1
Question: When will I receive advance Child Tax Credit payments?
Answer: The first round of payments will arrive on July 15. Additional payments will be issued on:
- August 13
- September 15
- October 15
- November 15
- December 15
Advance Child Tax Credit FAQs #2
Question: How much should I receive in advance Child Tax Credit payments?
Answer: You will receive half or 50% of the amount of your estimated 2021 Child Tax Credit divided into six monthly advance payments starting July 15th.
In general, you will receive $300 per month for each child 5 years of age or younger by the end of 2021.
And, $250 per month for children between the ages of 6 and 17 years old by the end of 2021.
This month, the IRS should have already sent or will be sending you form Letter 6417 that will inform you of the amount the IRS plans to send you for your estimated Child Tax Credit monthly payments.
Advance Child Tax Credit FAQs #3
Question: What children qualify for the 2021 Child Tax Credit?
Answer: According to the IRS, for the 2021 tax year, a qualifying child is an individual who does not turn 18 before January 1, 2022, and who:
- Is your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (like a grandchild, niece, or nephew).
- Does not provide more than one-half of his or her own support during 2021.
- Lives with the taxpayer for more than one-half of tax year 2021.
- Is claimed as your dependent.
- Does not file a joint return with the individual’s spouse for tax year 2021 or files it only to claim a refund of withheld income tax or estimated tax paid.
- Was a U.S. citizen, U.S. national, or U.S. resident alien and
- Has an SSN that is valid for employment in the United States
All mentioned qualifications must be met.
Advance Child Care Tax Credit FAQs #4
Question: If my 2020 tax return has not processed yet, will I still get the advance child tax credit payments?
Answer: In the scenario where your 2020 tax return has not processed yet, the IRS will use your 2019 tax return for all payments dates until it is processed.
If you did not file your 2019 or 2020 returns, you will need to file them.
If you were not required to file a 2020 tax return, you should use the online Non-Filer tool from the IRS to file a simplified tax return.
By doing so, you may be eligible to receive a third Economic Impact Payment and the 2020 Recovery Rebate Credit.
If you do not receive advance Child Tax Credit payments for a qualifying child you will claim in 2021, you can still claim the full amount of your allowable Child Tax Credit for that child when you go to file your 2021 tax return.
Advance Child Care Tax Credit FAQs #5
Question: What if I didn’t claim a child on my 2020 tax return, but will claim them on my 2021 tax return?
Answer: Your first advance Child Tax Credit payment will be based on the children that you claimed for the Child Tax Credit on your 2020 tax return.
Later in 2021, the IRS will update the Child Tax Credit Update Portal so you can add the qualifying children that you plan to claim on your 2021 tax return.
And this will adjust the amount of your monthly advance Child Tax Credit payments.
Advance Child Care Tax Credit FAQs #6
Question: What if my child is born in 2021?
Answer: As long as your child is born by the end of 2021, you will be eligible for the advance child car tax credit.
As we mentioned above, you will be able to use the Child Tax Credit Update Portal to update the IRS on qualifying children.
Advance Child Care Tax Credit FAQs #7
Question: What if a qualifying child moves in with the other parent during the year 2021 for more than half the year?
Answer: In this situation you have two options:
The first option is to get the other parent to allow you to claim that child for the Child Tax Credit for 2021.
To do so, you will need the other parent to sign Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, and attach it to your 2021 tax return on which you claim the Child Tax Credit.
The second option is to use the Child Tax Credit Update Portal to unenroll yourself from advance Child Tax Credit payments, or to remove that child from your Child Tax Credit information provided to the IRS.
If you do nothing and receive payments, you may have to repay the IRS when you file your 2021 tax return next year.
Advance Child Care Tax Credit FAQs #8
Question: How will payments be received?
Answer: Payments will be sent by direct deposit based on bank account information the IRS has from the following sources, in the following order:
- Your 2020 tax return.
- Your 2019 tax return, including information you entered into the Non-Filer tool on IRS.gov in 2020.
- Information you entered on Get My Payment in 2020.
- A federal agency that provides you benefits, such as: Social Security Administration,
- Department of Veterans Affairs, or the Railroad Retirement Board.
You will receive your advance Child Tax Credit payments by mail if the IRS can not find bank account information for you from the sources mentioned.
Advance Child Care Tax Credit FAQs #9
Question: If you get the monthly tax credits, will you still get child tax credits when filing 2021 taxes?
Answer: You will get the remaining half of your allowed tax credit based on your 2021 taxes.
Advance Child Care Tax Credit FAQs #10
Question: What should I do if my bank or mailing address changes in 2021?
Answer: You should use the Child Tax Credit Update Portal on irs.gov throughout 2021 if you need to do the following things:
- Update your mailing address;
- Update your bank account information;
- Add or subtract the number of your qualifying children, including by reason of the birth or adoption of a child;
- Report a change in your marital status; and
- Report a change in your income.
Advance Child Care Tax Credit FAQs #11
Question: How can I opt out of the advance Childcare Tax Credit
Answer: If you don’t want to get the credit at all, you should unenroll using the Child Tax Credit Update Portal.
Advance Child Care Tax Credit FAQs #12
Question: If I or my spouse owe taxes from previous years, will my advance Child Tax Credit Payments be reduced?
Answer: It will not. But, if you receive a refund after filing taxes for 2021, any child care credits included in that refund will be used to offset previous debts.
Advance Child Care Tax Credit FAQs #13
Question: Will I need to repay the IRS if my advance child tax credit is greater than my 2021 taxes allow for?
Answer: The answer is it depends.
Those who qualify for repayment protection will not have to repay some or all of the additional payments.
If you do not qualify for repayment protection, you will have to report 100% of the excess amount on your 2021 tax return as additional income tax.
You qualify for full repayment protection if your 2021 modified adjusted gross income (AGI) is equal to or less than:
- $60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
- $50,000 if you are filing as head of household; and
- $40,000 if you are a single filer or are married and filing a separate return.
You won’t qualify for any repayment protection if your 2021 modified adjusted gross income (AGI) is equal to or above
- $120,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
- $100,000 if you are filing as head of household; and
- $80,000 if you are a single filer or are married and filing a separate return.
If your 2021 AGI is between full repayment and no repayment protection, the amount of payment protection you are able to claim will be phased out proportionately to the excess.
So, if your modified AGI exceeds the AGI threshold by 25 percent. Your potential full repayment protection will be reduced by 25%.
You can find your modified AGI on line 11 of the 2020 IRS Form 1040 or line 8b of the 2019 IRS Form 1040 and don’t forget to include any foreign income.
Advance Child Care Tax Credit FAQs #14
Question: How can I keep track of the Advance Child Tax Credit Payment amounts?
Answer: The IRS will send you Letter 6419 in January 2022 that will provide you with total amounts of payments provided you in 2021.
Advance Child Care Tax Credit FAQs #15
Question: Are the advance Child Tax Credit Payments taxable?
Answer: The advance Child Tax Credit Payments are not considered income and do not have to be reported on your 2021 tax return.
Advance Child Care Tax Credit FAQs #15
Question: Are the advance Child Tax Credit payments garnishable?
Answer: Advance Child Tax Credit payments are not exempt from garnishment by non-federal creditors under federal law and can be garnished.
Advance Child Care Tax Credit FAQs #16
Question: Will the Child Tax Credit payments affect my government benefits?
Answer: They are not considered income and therefore can not be used against you regarding your federal benefits.
Advance Child Care Tax Credit FAQs #17
Question: Do those without kids qualify?
Answer: The answer is actually quite simple. No kid, no credit.
Well, there you have it. All answers to the most frequently asked questions regarding the 2021 advance Child Care Tax Credit!