Child tax credit 2021 eligibility? Income limit, phase-out rules and more

Are you eligible for the child tax credit advance? Income limit rules and more

There’s a lot to know about the new child tax credit payments. 

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If you and your family members are eligible, you should get your first child tax credit payment on July 15. Depending on the ages of your children, that could mean $300 a month for each child 5 years old or younger and $250 per month for each kid between the ages of 6 and 17, each month through the end of 2021. Babies born in 2021 are also included.

We’ll tell you what it takes to qualify for the child tax credit and the monthly total you’ll get. You can also get one large payment instead of several smaller ones. We can also offer some ideas for ways to spend or save your money once it comes.

It’s also possible the new child tax credit payments will get extended to 2025, as President Joe Biden has proposed. Families with children should also know how to claim up to $16,000 in child care expenses. As a side note, here’s what’s happening with a potential fourth stimulus check, what to do if you haven’t received your third stimulus checkwhen it could comehow to track it and how to see what could be causing a delay. This story was recently updated. 

Families with children ages 5 and younger could get $3,600 total per kid between this July 15 and next spring

If your dependents are below the age of 6, you can claim up to $3,600 per child as long as you meet the income requirements, which are listed below. That’s $1,600 more than the $2,000 that parents were able to claim on their 2020 tax returns. 

This includes newborns, even if they’re born later in 2020. The parent filing will be able to update the IRS portal with their new dependent information to begin receiving the advance payments this year, said Garrett Watson, a senior policy analyst at Tax Foundation. Otherwise, parents can file a claim on their 2021 tax returns next year.

Child tax credit 2021 qualifications

Who qualifies What the law says
Single filer An AGI of $75,000 or less to qualify for the full amount
Head of household An AGI of $112,500 or less to qualify for the full amount
Couple filing jointly An AGI of $150,000 or less to qualify for the full amount
Child age 5 and younger Credit for $3,600 each if parent/guardian meets above requirements
Child age 6-17 Credit for $3,000 each if parent/guardian meets above requirements
Nonfiler Will need to file a 2020 tax return to get the payment

Families with dependents between ages 6 and 17 could get up to $3,000 per kid

If you have dependents who are age 6 or older, you’ll qualify for up to $3,000 per kid over the next year, assuming you meet the income requirements (refer to the chart above). This includes your dependents who are 17 years old — originally, parents could only claim up to $2,000 for each dependent age 16 and younger.

You can also get money for your older kids, although it’s not nearly as much. You can claim up to $500 for an 18-year-old, as well as for full-time college students aged 19 to 24. 

Here’s what parents who share custody of a qualified dependent should know.

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Individuals who make $75,000 or less could get the whole amount

As long as your adjusted gross income, or AGI, is $75,000 or less, single taxpayer parents will qualify for the full child tax credit amount. After $75,000, the amount begins phasing out.

The credit phases out by $50 for every $1,000 of income over the threshold amounts for all filers, according to Joanna Powell, managing director at CBIZ.

Heads of household with an AGI of $112,500 could get the full amount

As a head of household, your AGI will need to be $112,500 or less to qualify for the full child tax credit amount. The amount you could get begins phasing out if your income is over $112,500.

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Married couples filing jointly with an adjusted gross income less than $150,000 could receive a partial payment amount

If you’re married and filing jointly with your spouse, your AGI needs to be $150,000 or less to qualify for the full child tax credit amount. 

How the 2021 child tax credit works for those who don’t file their taxes

Even if you don’t usually file taxes — you’re considered a nonfiler — you’ll need to file a return to qualify for the 2021 child tax credit. IRS Commissioner Charles Rettig said that payments will be automatic for those who file their 2020 tax returns by May 17, so if you don’t have your tax return submitted by this time, the IRS won’t know to send you a payment.

The IRS will open two separate online portals. You’ll use one if you don’t traditionally file your income taxes. 

It’s also important to file a return if you’ve gained new dependents since you last filed. That way you can get the full child tax credit amount you’re due.

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Further requirements that need to be met for advance child tax credit payments

  • The child you’re claiming must live with you for at least six months out of the year.
  • You and your child must be US citizens, unlike mixed-status households. 
  • For married couples filing jointly, at least one spouse needs to have a Social Security number or an ITIN, Powell said. 
  • The child must also have a Social Security number — a child with only an ATIN won’t qualify. (This includes adopted children.)
  • Parents who share custody of a child cannot both get the tax credit.

Important: The results here are based on our current knowledge of the law, but should be treated as broad estimates only. Consult a financial planner for a more personalized estimate.

For more information, here’s what to know about the 2021 child tax credit and when your payments will start arriving.

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