Published: July 6, 2021 | Last Updated: December 1, 2022

2021 Child Tax Credit & Advance Payment Option

The Advanced CTC payment option expired on 12/31/2021 and can only be continued if legislation is passed by Congress. If you are entitled to the Additional Child Tax Credit you can claim it on your 2021 Tax Return.

The American Rescue Plan Act of 2021 made important changes to the Child Tax Credit (CTC) for tax year 2021 only.

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Advance Child Tax Credit Payment Tracker

We now have a document for you to track your Advance Child Tax Credit payments.

The expanded credit means:

The credit amounts will increase for many taxpayers.
The credit for qualifying children is fully refundable, which means that taxpayers can benefit from the credit even if they don’t have earned income or don’t owe any income taxes.
The credit will include children who turn age 17 in 2021.
Taxpayers may receive part of their credit in 2021 before filing their 2021 tax return in 2022.

You must meet certain eligibility rules to claim and receive the credit. These rules, discussed in general, below, include filing a tax return even if you generally don’t have to. The amount of the credit depends on your income, filing status, and number of qualifying children.

For related CTC information for all other tax years, refer to the tax return instructions and forms for each tax year along with Publication 972, Child Tax Credit and Credit for Other Dependents.

Alert: Under the Protecting Americans from Tax Hikes (PATH) Act, the IRS cannot issue a refund involving EITC or ACTC before mid-February. The law provides this additional time to help the IRS stop fraudulent refunds and claims from being issued.

What do I need to know?

The American Rescue Plan Act of 2021 increased the amount of the CTC for the 2021 tax year only for most taxpayers. For 2021, the credit amount is:

$3,000, for qualifying children between age 6 to 17 years old
$3,600, for qualifying children age 5 and under.

The increased amounts are reduced (phased out), for modified adjusted gross income (AGI) over:

$150,000 for married taxpayers filing a joint return and qualifying widows or widowers,
$112,500 for heads of household, and
$75,000 for all other taxpayers.

The amount of the payments will phase out by $50 for every $1,000 (or fraction thereof) by which modified AGI exceeds the applicable threshold listed above based on your filing status.

For purposes of the CTC and advance CTC payments, your modified AGI is your adjusted gross income (from the 2020 IRS Form 1040, line 11, or the 2019 IRS Form 1040, line 8b), plus the following amounts that may apply to you.

Any amount on line 45 or line 50 of the 2020 or 2019 IRS Form 2555, Foreign Earned Income.
Any amount excluded from gross income because it was received from sources in Puerto Rico or American Samoa.

If you do not have any of the above, your modified AGI is the same as your AGI.

In addition, the term “qualifying child” is broadened to include a qualifying child who has not attained the age of 18 (in other years, a qualifying child is one who has not attained the age of 17 by the end of the calendar year).

Also, for the 2021 tax year only, the CTC is made fully refundable for taxpayers with a principal place of abode in the United States for more than one half of the tax year or taxpayers who are bona fide residents of Puerto Rico. Other taxpayers living in U.S. Territories, must claim the credit through those Territory processes.

The IRS will automatically issue advance CTC payments of up to 50 percent of the total estimated CTC to you, monthly, between July and December 2021, unless you take action to unenroll.

Other related information:

Advance CTC payments will not affect any government benefits that you receive, nor are they taxable.
Advance CTC payments will not be reduced (that is, offset) for overdue federal taxes from previous tax years or other federal or state debts that you owe that the IRS would normally be obligated to collect. However, if you claim a refund when you file your 2021 tax return in 2022, any remaining CTC amounts included in the calculation of your refund may be subject to offset for federal tax debts or other federal or state debts you owe.

Eligibility for the CTC in 2021

To qualify for CTC for 2021, you and any other family members claimed, such as your spouse or qualifying child, must have a Social Security number (SSN) that is valid for employment in the United States. (See IRS Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit for more information about SSNs and Topic I: U.S. Territory Residents and Advance Child Tax Credit Payments.)

Modified AGI and Phaseouts

The CTC begins to be reduced to $2,000 per child if your modified AGI in 2021 exceeds:

$150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
$112,500 if filing as head of household; or
$75,000 if you are a single filer or are married and filing a separate return.

The first phaseout reduces the CTC by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you. The CTC won’t begin to be reduced below $2,000 per child until your modified AGI in 2021 exceeds:

$400,000 if married and filing a joint return; or
$200,000 for all other filing statuses.

The second phaseout reduces the CTC by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

For more details about Modified AGI and the credit phaseout, see Topic C: Calculation of the 2021 Child Tax Credit.

Qualifying Child

In general, a child qualifies you for the CTC if the child meets all of the following conditions:
- The child is your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Adopted children qualify too.
- The child was under age 18 at the end of 2021.
- The child does not provide over half of his or her own support for 2021.
- The child lived with you for more than half of 2021.
- The child is claimed as a dependent on your return. See Pub. 501, Dependents, Standard Deduction, and Filing Information, for more information about claiming someone as a dependent.
- The child does not file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid).
- The child was a U.S. citizen, U.S. national, or U.S. resident alien. For more information, see Pub. 519, U.S. Tax Guide for Aliens.

There are special rules and exceptions that may apply to the above list. See Publication 972, Child Tax Credit and Credit for Other Dependents, for the full rules.

Actions

What should I do?

Find out if you qualify for advance payments

The easiest way to find out if you qualify for advance CTC is to use the IRS Advance Child Tax Credit Eligibility Assistant. (Spanish version) It will ask you questions about yourself and other family members to see if you qualify for the credit, and if so, it will estimate the amount.

Advance payment eligibility

The IRS will automatically issue advance payments, based on the estimated CTC due to you, in 2021. You can find out if you are already automatically enrolled, by using the Child Tax Credit Update Portal.

The estimated CTC total 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). Then the advance payment amounts are 50% of that estimated total, split into monthly payments. These payments will be made regularly from July 15 through December 15, 2021 to eligible taxpayers who have a main home in the United States for more than half the year. So, the total of the advance payments will be up to 50 percent (half) of the estimated CTC that you would be due when filing your 2021 tax return in 2022.

You cannot request that advance payment be issued any other way than to file a 2020 tax return. See below for more information.

Is your information on file with IRS?

If you already filed a prior year tax return claiming the CTC, for 2019 or 2020, you do not need to take any action, unless:
- You do not want to receive advance payment,
- You want to receive the credit in full when you file your 2021 tax return in 2022, or
- Your information has changed since filing.
If you have not filed a 2019 or 2020 tax return claiming the CTC (including information you entered into the IRS’s Non-Filer tool for Economic Impact Payments on IRS.gov in 2020), you will need to file a tax return.
- The IRS has created a special tool, called the Child Tax Credit Non-filer Sign-up Tool (Spanish version) that allows certain taxpayers to register to be eligible for advance CTC payments. Carefully read the ‘Who Should Use This Tool” and the ‘What You Need’ information on that page before using the tool.

How will I receive advance payments?

If the IRS has received your banking information, your payment will be sent to you as a direct deposit. The IRS will use bank account information 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.
A federal agency that provides you benefits, such as: Social Security Administration, Department of Veterans Affairs, or the Railroad Retirement Board.

If the IRS does not have bank account information to issue you a direct deposit, the IRS will send your advance CTC payments by mail.

What if I choose not to receive advance payments?

You might choose not to receive advance payment for several reasons, including that:

You expect the amount of tax you owe to be greater than your expected refund when you file your 2021 tax return in 2022.
You know you will no longer qualify for the credit for the 2021 tax year, due to the child’s age or because your total earned income amount is now over the income limitations.
You have an existing written agreement with the child’s other parent to not claim this credit in 2021 and/or the child lived with the other parent for more than half of the year.
You prefer to receive the total credit when you file your 2021 return in 2022.

For other examples, see the Questions and Answers About the Advance Child Tax Credit Payments on IRS.gov.

How do I un-enroll (opt-out)?

If you choose not to receive these advance payments, you must unenroll (opt-out) by:

Using the IRS’s Child Tax Credit Update Portal
- See IRS FAQs under Topic J: Unenrolling from Advance Payments for more information.
- For taxpayers who are married, both spouses need to unenroll. Unenrolling applies to the individual only. If one spouse doesn’t unenroll, they will get half of the joint payment both of you were supposed to receive.

If eligible, you should receive IRS letter 6417 describing the steps needed to unenroll, follow those instructions. If you did not receive a letter, go to the IRS’s Advance Child Tax Credit Payments in 2021 page and follow the instructions located there.

Note: After you unenroll, via the tool above, advance payments will cease. Check back after unenrolling to make sure your request was processed successfully.

Caution: You cannot re-enroll at this time. Currently, unenrollment is a one-time action. Check the IRS FAQs for any changes or updates.

What is the due date for un-enrolling?

To stop advance payments, you must unenroll 3 days before the first Thursday of next month by 11:59 p.m. Eastern Time.

Payment Month	Unenrollment Deadline	Payment Date
July	6/28/2021	7/15/2021
August	8/2/2021	8/13/2021
September	8/30/2021	9/15/2021
October	10/4/2021	10/15/2021
November	11/1/2021	11/15/2021
December	11/29/2021	12/15/2021

What if my information has changed since filing or changes after July 1?
You should notify the IRS of certain changes, listed further below, by:

Using the IRS’s Child Tax Credit Update Portal (CTC Up), * when the feature to do this becomes available.

Changes* that can and should be reported include the following:

Updating your mailing address;
Updating your bank account information;
Adding or subtracting the number of your qualifying children, including by reason of the birth or adoption of a child, or if the child changes the primary location of where they live more than 50 percent of the year;
Reporting a change in your marital status; and
Reporting a change in your income.

For more details, see the IRS’s Advance Child Tax Credit Payments in 2021 page and the FAQs for Topic F: Updating Your Child Tax Credit Information During 2021.

*Important note: The IRS’s Child Tax Credit Update Portal (CTC Up) will allow the above changes but in a phased-in timeline. In June 2021, it began allowing changes related to unenrollment (opt-out). In July 2021, it began allowing updates to banking information for August and subsequent payments. In August 2021, it began allowing updates to mailing addresses. On November 1, it allows updates to income. Future tool enhancements, expected to be available later in the year, should allow all remaining changes mentioned above to be completed at that time. For more details about using this tool, read the information located on the tool page or see the 2021 Child Tax Credit and Advance Child Tax Credit Payments Frequently Asked Questions page.

Caution: Changes 3 thru 5 listed above should be reported as soon as allowable, as they directly affect not only the amount of the monthly advance payment issued, but also the total amount of CTC allowed on the 2021 tax return. So, depending on what those changes are, increases or decreases, understand you may potentially end up owing a balance due or receiving a reduced refund once all the information is reconciled on the tax return. See the How will this affect me? section below or the IRS’s page and associated FAQs for even more details and examples.

Claiming the Credit

Eligible taxpayers will generally claim the credit in tax year 2021, on the Form 1040 series income tax return. Puerto Rico residents will claim the credit using Form 1040-PR, Form 1040-SS, or other 1040 series form. Taxpayers living in other U.S Territories must follow the instructions from their territory tax agency.

All taxpayers who received advance payment 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. The IRS mailed Letter 6419 to inform you of your total Advanced CTC and where it should be included on the 8812. If you did not receive the Letter 6419 or you have lost your letter you can go to your on-line portal to view your Advanced Child Tax Credit Payment. This will be required whether you have a regular requirement to file a tax return or not.

For more details on claiming the credit and reconciling advance payments for the 2021 tax year, see IRS’s Advance Child Tax Credit Payments in 2021 page, the FAQs located there, and the 2021 Form 1040 series income tax return instructions when they are published.

How will this affect me?

Everyone who receives advance CTC payments, must reconcile the amount of advance payments against the amount of total CTC for which they are eligible on their 2021 individual income tax return. Instructions for doing this will be included in the 2021 individual tax return instructions and on the IRS’s Advance Child Tax Credit Payments in 2021 page. See also, Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return.

If the amount of your CTC exceeds the total amount of your advance CTC payments, you can claim the remaining amount of your CTC on your 2021 tax return.
If you receive a total amount of advance CTC payments that exceeds the amount of CTC that you can properly claim on your 2021 tax return, you may need to repay to the IRS some or all of that excess payment.

In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance CTC payments that were disbursed to you during 2021. Please keep this letter regarding your advance CTC payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.

What if I need to repay an amount?

If you qualify for the repayment protection described below, you will be excused from repaying some or all of the excess amount.
If you do not qualify for repayment protection, you will need to report the entire excess amount on your 2021 tax return as additional income tax. This additional income tax will reduce the amount of your tax refund or increase your total tax due for 2021.

You qualify for full repayment protection and won’t need to repay any excess amount if your main home was in the United States for more than half of 2021 and your modified AGI for 2021 is at or below the following amount based on the filing status on your 2021 tax return:

$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.

Your repayment protection may be limited if your modified AGI exceeds these amounts or your main home was not in the United States for more than half of 2021.

If you qualify for repayment protection, the amount of your tax liability from excess advance CTC payments is reduced by up to the full repayment protection amount. The full repayment protection amount equals $2,000, multiplied by the following:

The number of qualifying children that the IRS took into account in determining the IRS’s initial estimate of your advance CTC payments, minus
The number of qualifying children properly taken into account in determining the allowed CTC amount on your 2021 tax return.

Wait, I still need help

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn’t working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.

Visit www.taxpayeradvocate.irs.gov or call 1-877-777-4778.

Low Income Taxpayer Clinics (LITCs) are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page on the TAS website or Publication 4134, Low Income Taxpayer Clinic List.