Update May 2022: The timeframe for receiving advance payments of the Child Tax Credit (CTC) during 2021 has expired. The Child Tax Credit Update Portal and Child Tax Credit Non-filer Sign-up Tool, mentioned in this section, have now been closed and are unavailable. Note: All taxpayers who received advance payment(s) of this credit, must file a tax return, to claim the CTC and reconcile the amount they received in advance versus the total amount for which they qualify. This will be required whether you have a regular requirement to file a tax return or not.
To claim the 2021 Child Tax Credit, see IRS’s Child Tax Credit page and Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return if you received advance payment(s) or our 2021 Child Tax Credit & Advance Payment Option Get Help page for more information. Puerto Rican residents, should see IRS provides guidance for residents of Puerto Rico to claim the Child Tax Credit for special instructions.
Important: Taxpayers do not need to take any action other than to file their 2020 tax return as soon as possible (preferably electronically) if they have not done so to ensure the IRS has the information needed in time to determine potential eligibility for the advanced payment program.
Advanced payments of the 2021 CTC will be made monthly from July through December to eligible taxpayers, starting July 15. The advanced payments will be up to 50 percent of the total estimated credit, which is based on information included in eligible taxpayers’ 2020 tax returns (or their 2019 returns if the 2020 returns are not filed and processed yet). See Topic D: Calculation of Advance Child Tax Credit Payments and Topic G: Receiving Advance Child Tax Credit Payments for more details.
Taxpayers will be required to report all advanced payments received and reconcile them against the total credit. See Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return for more information.
For the latest IRS guidance, see the new IRS.gov Advance Child Tax Credit Payments in 2021 and Questions and Answers About the Advance Child Tax Credit Payments pages.
Note: do not confuse these advanced CTC payments with the additional Child Tax Credit.
For tax year 2021, the ARPA temporarily increased the maximum amount of work-related expenses for qualifying care that may be taken into account in calculating the child and dependent care credit, increased the maximum percentage of those expenses for which the credit may be taken, modified how the credit is reduced for higher earners, and made it refundable.
For 2021, eligible taxpayers can claim qualifying work-related expenses up to:
Combined with the increase to 50 percent in the maximum credit rate, taxpayers with the maximum amount of qualifying work-related expenses would receive a maximum credit of $4,000 for one qualifying person, or $8,000 for two or more qualifying persons. When calculating the credit, a taxpayer must subtract employer-provided dependent care benefits, such as those provided through a flexible spending account, from total work-related expenses.
Families with incomes up to $125,000 are eligible for the full credit, after which the percentage of expenses that taxpayers can claim gradually decreases until it phases out at $438,000 in adjusted gross income.
The credit is fully refundable for the first time in 2021. This means an eligible taxpayer can receive it, even if they owe no federal income tax.
Claiming the credit
For more Child and Dependent Care Credit information, see:
Section 9621 of the ARPA temporarily expands EITC eligibility and increases the amount of the credit for taxpayers with no qualifying children. For the 2021 taxable year only, in the case of the credit for a taxpayer with no qualifying children, the minimum age is reduced from 25 to 19. However, if the individual is a specified student, the minimum age is reduced from 25 to 24. The provision further reduces the minimum age to 18 for any qualified former foster youth or qualified homeless youth. The upper age limit on the credit for taxpayers with no qualifying children is temporarily removed for the 2021 taxable year only.
The provision increases for 2021 the amount of the credit for taxpayers with no qualifying children. The credit percentage and phaseout percentage are increased from 7.65 percent to 15.3 percent. In addition, the earned income amount is increased to $9,820, and the beginning of the phaseout range for non-joint filers is increased to $11,610 ($17,550 if married filing jointly).
Other provisions of Section 9621 apply to taxable years beginning after December 31, 2020.
(1) Does not have the same principal place of abode as the individual’s spouse during the last six months of the taxable year, or
Claiming the credit
For more information about EITC, see: