The IRS has started making monthly payments for the expanded Advance Child Tax Credit (CTC). Nearly 40 million households covering 88% of eligible dependents will automatically begin receiving monthly payments without any further action required by their parents or those claiming them as dependents.
The key is ensure you have e-filed your 2020 tax return or updated the non-filers tool 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 this payment. This article is regularly updated and you can stay connected via the free subscription options below.
Covered in this Article:
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 first [July] batch of advance monthly payments worth roughly $15 billion to about 35 million families across the country. About 86% were sent by direct deposit.
|Monthly Payment Date||Payment to ages 5 and younger||Payment for ages 6 to 17|
|July 15th, 2021 (Paid)||$300||$250|
|August 13th, 2021||$300||$250|
|September 15th, 2021||$300||$250|
|October 15th, 2021||$300||$250|
|November 15th, 2021||$300||$250|
|December 15th, 2021|
(last payment for 2021)
|After April 15th 2022: Second half of payment|
paid via Tax return filing
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 Tool and Getting the Advance Child Tax Credit 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 receive 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.
IRS update on pending eligibility: 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.
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 CTC Payment Tracking – When You Can Request a Payment Trace
If you were deemed eligible for the CTC and payment was confirmed via the IRS portal, but you didn’t get the payment you can request a payment trace to track your payment. The IRS has provided the following timelines to factor in before you mail or fax a completed Form 3911 (Taxpayer Statement Regarding Refund) to start a payment trace.
- 5 days since the direct deposit date and your bank says it hasn’t received the payment
- 4 weeks since the payment was mailed by check to a standard address (per your tax return, CTC portal or non-filer data)
- 6 weeks since the payment was mailed, and you have a forwarding address on file with the local post office
- 9 weeks since the payment was mailed, and you have a foreign address
Submitting before these deadlines (based on payment method) will likely mean you won’t get a response from the IRS. On the flip side don’t wait too long past the deadlines as the IRS is quite backlogged and traces could take some time.
I will post updates and resolutions (where available) to common payment issues in this section on a regular basis. You can subscribe via the options below to get notified of these.
Retroactive Child Tax Credit (CTC) Payments
If you didn’t get a payment you were expecting or it was lower than expected, you will probably have to claim this in your 2021 tax filing (filed in 2022). Check the official letter (6417) and IRS CTC portal to confirm payment details
The IRS has announced that eligible claimants will be able to get and provide updated information later this year by using the Child Tax Credit Update Portal (CTC UP). This will allow checking of enrollment status and the ability to provide or update your bank account information.
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.