Advanced Child Tax Credit for your 2021 Tax Return

Advanced Child Tax Credit for your 2021 Tax Return

For qualifying children the Child Tax Credit payment for 2021 is as follows:

Children ages 5 or younger you will receive $3,600
Children from the ages of 6 to 17 you will receive $3,000
Dependents 18 and older you will receive $500

For tax years 2020 and prior the Child Tax Credit was $2,000 for children thru the age of 17 and $500 for dependents over the age of 18.

How the Advanced Child Tax Credit Works

• If you are qualified to receive a $3,600 Child Tax Credit on your 2021 tax return you will receive $1,800 in advance in $300 monthly payments over 6 months in 2021.

• If you are qualified to receive a $3,000 Child Tax Credit on your 2021 tax return you will receive $1,500 in advance in $250 monthly payments over 6 months in 2021.

• The advanced payment you receive in 2021 – the key word being ADVANCED – means your credit will be reduced by that amount when you file your 2021 tax return.

For example – if you 2 have children between the ages of 6 and 17 you would receive a $6,000 credit when you file your tax return. But if you receive the Advanced Child Tax Credit in 2021 – your credit would be $3,000 because you have already been paid.

What should I do?

I decided to receive the Advanced Child Tax Credit payments in 2021 –

  • Keep up with the payments and make sure that you received all your payments
  • As tax preparers – we will need to know how much you received in payments
  • Know that when you file your 2021 tax return that you could owe money to the IRS since you already received your Child Tax Credit in ADVANCE

I want to opt out of receiving the payment and take the full credit on my 2021 tax return – 

  • Click on the following link –– https://www.irs.gov/credits-deductions/child-tax-credit-update-portal
  • Click on “Manage My Advanced Payments”
  • The following page will let you set up an account thru ID.me.
  • You will be able to find out how much you receive in payments
  • You will be able to opt out of your payments
  • If your filing status is married filing jointly – both spouses need to opt out of the advanced payments. If only one spouse opts out – you will continue to receive payments.
  •  You have until August 30th to opt out of the payments.

Updated August 16, 2021