The IRS has now processed the sixth (December) and final round of advance 2021 monthly payments for the expanded Child Tax Credit (CTC) to parents and guardians with eligible dependents. The advance payments accounted for 50% of the credit you were due, with the remainder (and any adjustments) to be claimed via your 2021 tax filing.
Those who didn’t get any payments and feel they were eligible should e-file a tax return or update the CTC non-filers tool (details below) so that the IRS has your latest income and dependent information to pay out this credit correctly.
See the relevant sections and comments below for more details and FAQs around the CTC credit, 2022 refund payment delays and whether this payment will continue in 2022. This article is regularly updated and you can stay connected via the free subscription options below.
Guidance for Claiming the CTC via 2021 Tax Filings in 2022 (Reconcile amounts)
With the 2022 tax filing season now underway (see key dates) families should have gotten their official IRS CTC payment notice (a.k.a Letter 6419) by the end o January. This letter from the IRS provides all the official payment and coverage details around the advance child tax credit that will be helpful for your tax return filing.
Since 50% of the CTC payments in 2021 were an advance payment on what you normally would get paid via your 2021-2022 tax filing, you may have to pay more in taxes (or get a lower refund) if your income was much higher than in your past tax returns or submitted CTC portal information, which is what the IRS used to estimate your payment.
If you didn’t receive one or more monthly advance Child Tax Credit payments in 2021 for a qualifying child, you can still receive those payments –and the remaining amount of your credit – by claiming the Child Tax Credit for that child when you file a 2021 tax return during the 2022 tax filing season. This includes families who don’t normally need to file a return or had a change of dependents in 2021.
Most major tax software providers (I recommend TurboTax or efile for a lower cost filing option) will have step-by-step instructions to help you figure out your CTC tax filing calculations and ensure you get the second half of your payment in your tax refund payment.
If you don’t receive your IRS 6419 letter, you can follow up by calling the IRS or check how much they’ve paid through IRS CTC update portal.
Note that as in previous years, the CTC refund payment is subject to the PATH act delay. Further the IRS has noted issues with some of the reconciliation 6419 letters.
In particular married spouses are getting separate letters but need to ensure they combine amounts if filing jointly. Another error was with a small group of taxpayers who moved or changed bank accounts in December. The IRS 6419 notice didn’t always account for this payment and so could be under reporting what you got.
The best option is to ensure your 6419 letter and online IRS CTC account reconcile. In fact the IRS guidance is that if they amounts don’t reconcile, go with the total amount reflected on the online IRS account because it has the most up-to-date information regarding the CTC.
Also remember, even if you didn’t receive any advance CTC payments in 2021 or opt out, you might still newly qualify for the full credit. If you had a baby last year, for instance, you can claim the credit when you file your 2021 taxes.
You want to ensure the CTC portion claimed in your 2021-22 Tax return is consistent with that the IRS has. Otherwise your tax return and refund could be held up further for manual IRS verification.
Credit for tax years prior to 2018
Prior to the Tax Cuts and Jobs Act of 2017, the Child Tax Credit and the Additional Child Tax Credit looked a bit different. The Child Tax Credit provided a credit worth up to $1,000 per child. No portion of the credit was refundable, so if it reduced your tax liability to zero, the excess credit had no effect on your refund.
The Additional Child Tax Credit was an entirely separate tax credit, but it applied only to families with earned income above $3,000. Families received a refundable credit equal to 15% of their earned income over that threshold, up to $1,000 per child.
Additional Child Tax Credit (ACTC) vs Regular Child Tax Credit (CTC)
The ACTC and CTC were two different credits a few years ago. The CTC was a $2000 non-refundable credit that allowed eligible tax payers with dependents to lower their tax liability. The ACTC was a supplementary refundable tax credit to allow people who had no tax liability to claim up to $1400 as a (refundable) payment.
Recent tax reform simplified this and expanded the overall payment. It also allowed more taxpayers to take advantage of them by lowering the earned income threshold and raising the phase-out levels.
The one difference is that it seems that the new CTC is not subject to the PATH act, but the ACTC was. However this is to be confirmed.
Will the Expanded Monthly Child Tax Credit Continue in 2022?
Under Biden’s Build Back Better spending plan working its way through Congress, the currently expanded Child Tax Credit has provisions for a further one year extension and advance payments in 2022, bringing the total amount paid over 2 years to a maximum of $7,200. The current expanded CTC is a refundable credit, being partially paid in advance in 2021. The rest is claimed in 2022 via your tax return.
The 2022 CTC extension will work in a similar manner to the 2021 payment, expected that it can be paid in advance for all of 2022, meaning an ongoing monthly payment for over 35 million American households. See below for the standard/base payment amounts available over the next 2 years.
|Expanded CTC Year||Ages 5 and younger credit||Ages 6 to 17 Payment|
|2022||$1800 + $3600**||$1800 + $3000**|
Note: Those who don’t claim the monthly advanced CTC payments, can claim the full or partial amounts in their subsequent year tax returns.
While the final text of the spending package is still to be released and passed (see updates here), it is expected that qualification income thresholds will remain the same as shown below for the current expanded CTC. Any missed payments, should be the bill be approved later in 2022, will be made retroactively.
2021 CTC IRS Payment Dates and Status
Ongoing payments will be made on or about the 15th of every month via direct deposit, mailed checks or debit card. Direct deposit payments are the most efficient way to get this payment. You can see the table below for payment dates and amounts (per dependent) in 2021.
The IRS sent the latest batch of advance monthly payments worth roughly $15 billion to about 35 million families across the country. Nearly 90% were sent by direct deposit.IRS News Release
|Monthly Payment Date||Base Payment for 5 and younger||Base Payment for ages 6 to 17|
|July 15th, 2021 (Paid)||$300||$250|
|August 13th, 2021 (Paid)||$300||$250|
|September 15th, 2021 (Paid)||$300||$250|
|October 15th, 2021 (Paid)||$300||$250|
|November 15th, 2021 (Paid)||$300||$250|
|December 15th, 2021 (Paid)|
(last payment for 2021)
|After April 15th 2022: Second half of payment|
paid via Tax return filing
Could the December CTC payment be delayed due to Debt Limit Impasse?
Update (Dec 13th): Congress agreed on a deal to raise debt limit and CTC payments will go out on schedule.
With Congressional Democrats and Republicans haggling over raising the debt limit (for the 101st time!) there is a very real risk the December Child Tax Credit payments could be delayed since these are paid from federal dollars, which are subject to the debt limit.
This last happened in October, but fortunately Congress was able to raise the debt limit in time and payments were not impacted then. But with the Debt limit again due for review in December, there is a risk this could impact upcoming payments. I will continue to monitor and post updates here.
Why is my Child Tax Credit Payment larger than expected?
Many families saw recent payments that were much larger than the standard $250/$300 payments. This is because the IRS is making up missed payments for prior months in future months, once eligibility for the payment is verified and approved.
For example, families who did not get a July or August payment and are getting their first monthly payment in September will still receive their total advance payment for the year of up to $1,800 for each child under age 6 and up to $1,500 for each child ages 6 through 17. This means that the total payment will be spread over four months, rather than six, making each monthly payment larger. For these families, each payment is up to $450 per month for each child under age 6 and up to $375 per month for each child ages 6 through 17.
CTC Qualification and Eligibility Rules
In response to providing support to families during the COVID pandemic, President Biden and the Democrats passed legislation via the American Rescue Plan (ARPA) Stimulus package to expand the current Child Tax Credit (CTC) to $3,000 annually per child (or $250 monthly) between the ages of 6 and 17, while increasing it to $3,600 for children under the age of 6 (infants), equivalent to $300 monthly.
The IRS will make half these payments in advance in 2021 on a monthly basis versus eligible recipients having to claim the credit via their 2021 tax return in 2022. Nearly 70 million children and their families would be eligible for this credit/stimulus in 2021. See more in this YouTube video cover the CTC payment and IRS FAQs.
The Biden expansion raised the maximum benefit by 80% per child for most families and extends it to millions of families whose earnings are too low to fully qualify under existing law. Currently, a quarter of children get a partial benefit, and the poorest 10% get nothing. Key updates and expanded eligibility include:
- Expands eligibility to 17-year-old children (vs 16 or under per current CTC rules). This means children under the age of 18 as of the end of 2021 (last day of the tax year) would be eligible for this advance refundable credit.
- Increase the credit to $3,000 per child older than 6 and $3,600 per child under the age of 6.
- Remove the $2,500 earned income minimum requirement.
- The expanded CTC stimulus is a fully refundable tax credit – so you don’t have to have taxable income to get it (i.e. not a tax deduction)
- Half of the credit can be paid in advance between July 2021 to December 2021. Tax payers can choose to get these monthly or opt-out if they want and claim in 2022.
Note that the expanded CTC payment would be in addition to the $1,400 dependent stimulus check (economic impact payment) that is also in the latest stimulus bill. So in total some families could be getting close to $5,000 per child in 2021 with these two payments! See more in this video on how some families could get up to $10K with these credits.
A moderate expansion was also made to the Earned Income Tax Credit (EITC) for 2021, which is available to adults with no dependents. A $500 other dependent payment is also available to adult dependents who don’t qualify for the CTC.
CTC Income Qualification Thresholds
Shown below are the income thresholds below which the full CTC credit is paid. The amount of the credit paid is reduced by $50 for each $1,000 (or 5% of credit) for Taxpayer’s Income (MAGI) exceeds the maximum credit threshold amount. The phase-out is why many eligible recipients are seeing partial CTC payments, even if their incomes are above the full payout thresholds.
|2019 or 2020 Tax Filing Status||Income Below Which Full CTC Is Paid (5% Phase-out applies after this)|
|Single or Married filing separate||$75,000|
|Head of household||$112,500|
|Married filing jointly||$150,000|
For example, a family with three dependent kids ages 16, 12 and 5 earning less than $120,000 would get up to $800 per month from the IRS from July through December 2021, for a total of $4,800.
Note: The current CTC, prior to the ARPA expansion, was $2,000 per eligible dependent child under the age of 17. The credit began to phase out for those whose incomes (AGI) are above $200,000 (singles)/$400,000 (joint return). Families that aren’t eligible for the expanded CTC due to income levels or other reasons would still be able to claim the regular/existing CTC credit of $2,000 per child, less the amount of any monthly payments they got in 2021.
2020 or 2019 Tax Year Data Used to Figure Eligibility
The IRS will use the most recent of your 2019 or 2020 tax data (efile for free here) to ensure the latest dependent and payment information can be used. However any dependent 18 or younger at the end of 2021 is eligible for the expanded CTC, which is considered an advanced refundable credit against your 2021 taxes.
The CTC can also be claimed in your 2021 return (filed in 2022) if you prefer to opt-out or unenroll from the monthly payments in 2021.
Non-Filers CTC Tool and Getting the Advance Monthly Payments
Individuals who filed a Federal income tax return for taxable year 2019, including by entering information into the “Non-Filers: Enter Payment Info Here” tool last year, do not need to file a tax return to receive the advance child tax credit payment for the 2020 CTC qualifying children shown on that return. However if they need to update income, payment details or dependents – they should file a simple IRS tax return (for free).
Additionally, later this year, the IRS has announced that individuals and families who are not required to file a 2020 tax return will be able be able to use the Child Tax Credit Non-filer Sign-up tool on the IRS site to submit changes in income, update payment details, adjust filing status or number of qualifying children.
Once you submit your information on this tool the IRS will still need to determine your eligibility for the advance payments and to ensure the dependents you are claiming have not being claimed by others who filed a valid 2020 tax return.
How Will Payments be Made?
Ongoing CTC payments will be made on or about the 15th of every month, per the above schedule. Payments will be made via direct deposit, paper check, or debit cards. Direct deposit payments are the most efficient way to get this payment. Your latest tax return payment details will likely be used for making these payments.
Most eligible recipients for these advance monthly payments will have received an IRS letter to their home address to confirm payment detail. Check the IRS CTC portal if you didn’t get a letter – your address on file maybe incorrect. No action is needed to enroll other than a 2020 tax filing (you can file a simple IRS tax return here for free).
Also remember that only half the total CTC credit amount will be paid in advance monthly payments in 2021. You will need to claim the other half when you file your 2021 income tax return in 2022.
Payment Issues with the Monthly Child Tax Credit – Pending Eligibility Status
As with any federally funded benefits program that is being instituted in a relatively rapid fashion by a large government agency (the IRS) I expect that there will be ongoing payment issues around eligibility and initial payments. This was the case with stimulus payments/checks and unemployment benefits, so expect to face some bumps in the road.
The IRS has provided the CTC portal (see below for more) to check if you’re enrolled to receive advance payments (in addition to providing/updating your bank account details) and will provide a eligibility status. Because there are several eligibility criteria, non-filer data to process, fraud issues and potential multiple claims for the same dependent you may see a PENDING ELIGIBILITY status while the IRS does its due diligence.
You should keep checking the CTC portal (updated daily) to confirm the status of your payment because you will not receive advance CTC payments until the IRS confirms your eligibility.
Also note it there are payment issues in getting the monthly CTC payment into your bank account, the IRS will send your payment via check to your home address. This was done in recent rounds of payments and the IRS will alert the impacted parties via a letter or on the CTC portal. Around 15% of families were impacted by this in earlier rounds of payments according to the IRS.
IRS update on pending eligibility due to delayed tax return processing
The IRS has said that people may see the “pending eligibility” status because the IRS is still processing the tax filers 2020 tax return! I imagine several taxpayers are in this boat given lengthy IRS processing delays this tax season, and will need the IRS to finish processing their return so that their eligibility for the CTC payment is confirmed.
At this stage the IRS is saying if your return is processed at least 2 weeks before the CTC payment date for a given month, you should then get your eligible payment. E.g. In August, returns processed by August 2nd were paid the CTC on the August 13th payment date.
If the IRS is not able to confirm your CTC eligibility in 2021 (and no payments are made unless it is confirmed), you may be eligible to claim the full CTC when you file your 2021 tax return in 2022.
Missing or Incorrect CTC Payments – Catch-up Payments and Requesting a Payment Trace
Technical glitches have caused the IRS to miss certain payments. For example due to system issues for those who updated their (or spouses) bank or address details via the CTC portal (around 2% of recipients), September CTC payments were not able to be processed correctly or caused an overpayment.
The IRS normally automatically addresses these issues once identified and adjusts future payments (up or down) to account for these errors. In some cases the payment is made off-cycle (catch-up payment) or fixed in the following month’s payment – which is why your amount received may differ on a month to month basis. The IRS will send a formal letter to confirm this adjustment.
If you were deemed eligible for the CTC and payment was confirmed via the IRS portal (i.e. no errors), but you didn’t get the payment you can request a payment trace to track your payment using Form 3911 (Taxpayer Statement Regarding Refund) to start a payment trace.
Retroactive Child Tax Credit (CTC) Back Payments
If you didn’t get a payment for prior month(s) or it was lower than expected, you will be “caught-up” in subsequent months. The IRS confirmed this in their latest update wherein families who did not get a prior month payment (e.g. in July) and are getting their first monthly payment in August will still receive their total advance payment for the year.
This means that the total payment will be spread over five months, rather than six, making each monthly payment larger. This was confirmed in some recent comments when some recipients were pleasantly surprised with a larger payment. You can also check the CTC portal, which will provide the latest payment amounts and details.
If you are not caught up or paid retroactively by the end of 2021 after the final payment, you will have to claim/adjust this via your 2021 tax filing (filed in 2022).
Can you unenroll from or opt-out of the monthly child tax credit payment?
Yes. The IRS has setup a new online portal with instructions on how to unenroll from this advanced payment program and instead receive the expanded CTC credit when you file your 2021 return next year. You only need to opt out or unenroll once for all future payments.
The key is to ensure you unenroll form receiving this payment three days before the monthly enrollment deadline shown below. See step-by-step instructions for opting out or unenrolling from the monthly CTC payment.
Further, if you filed a joint return, both spouses will need to opt out on the CTC portal, or the unenrolled spouse will get 50% of the payment.
|Payment Month||2021 Unenrollment Deadline|
You can get more details on the CTC portal on the IRS site ; which will provide more details on how to opt out of the periodic payments and take the full child credit on your tax return next year.
If you unenroll from the program at any time, you cannot re-enroll at this stage according to the IRS. Unenrollment is a one-time action. However the IRS may reopen this program for re-enrollment from late September 2021.
Can my CTC payment be withheld for Child Support, Garnishment or Federal Offsets?
While CTC payments are not subject to federal offsets or past due child support, they will be subject to garnishment according to the IRS. This includes garnishment state, local and private creditors. For those filing joint returns, you can use Form 8379 to ensure your payments are not offset due to your spouses previous debts (see more in this article).
What if my child turns 18 in 2021? Will they get the credit?
No. They have to be under 18 at the end of 2021. Since this is refundable 2021 tax credit, paid in advance, it would only cover dependents under the age of 18 on the last day of the tax year (or first day of 2022). The IRS has confirmed this in recent guidance.
For those children that go from 6 to 7 in 2021, they will only get the smaller monthly payment because the credit criteria is based on the age as of the end of 2021.
Do I have to pay back this credit if I have no income in 2020?
No. This is a full refundable credit; which means that taxpayers with no income or taxes due and who meet all the other eligibility rules, can get the maximum credit.
Will monthly payments be made in 2022?
At this stage the expanded CTC and advance monthly payments are only for the current year – 2021. 2022 payments will need to be claimed via your 2021 tax filing. Democrats do want to make it permanent given the wide spread safety net to lower and middle class families, but at a cost of $100 billion per year it will be hard to get approval in Congress for ongoing funding, especially when the Pandemic has receded.
How do I report these payments in my 2022 tax return?
These will be accounted for by the IRS or your tax software when filing your return next year. However you should be aware that if you receive a refund when filing next year (2021 return), any remaining Child Tax Credit amounts included in your refund may be subject to offset for tax debts or other federal or state debts you owe.
How do I Contact the IRS about my CTC payment?
Using the IRS’ CTC portal or going to childtaxcredit.gov is the most efficient way to get information for your CTC payment. However if your situation is complex or you have been in pending eligibility status for a long time then you can contact the IRS on their general number at 800-829-1040. You will need to provide identity verification income from your latest tax return or other government agency data.
However be prepared for a long wait given the IRS resource constraints around processing returns, stimulus and ongoing CTC payments. If the live agent is not helpful you can also consider talking to a tax advocate.
Your final recourse, if the IRS agent cannot solve your payment eligibility issues, is to then claim your missing payment amounts when you file your 2021 tax returns next year.