Important Changes to the Child Tax Credit (CTC)

In our last web post, we discussed the Advance Child Tax Credit Payments the IRS is planning to send to eligible taxpayers monthly beginning July 15th. We would like to expand on the information sent previously, as we have received additional information.

Advance Child Tax Credit Payments

The American Rescue Plan (ARP), which was signed into law in March 2021, increased the Child Tax Credit (CTC) amount which was previously $2,000 per child to $3,600 per child for those under 6 and $3,000 per child for those age 6-17. The ARP also established the advance payments of the 2021 CTC will be paid regularly from July to December for 50% of the CTC which each household is eligible to receive. The CTC payments will be estimated based on the 2020 tax return for each household, or the 2019 return if the 2020 has not been filed yet. Read further details about the Advance Child Tax Credit Payments here

The Advance Payments are NOT extra money, but rather they are an advance on the Child Tax Credit that normally would factor into the amount due or owed on the tax return of eligible taxpayers. If you choose to receive the advance CTC payments, your child tax credit amount will be lower when your return is filed, so the refund received will be less or the tax owed will be higher by the amount of the advance payments.


Unenrolling from receiving Advance CTC Payments

Eligible taxpayers will have the opportunity to unenroll from receiving the advance payments if they prefer to receive the full CTC when their 2021 tax return is filed in 2022. Also, taxpayers who have changes to income, filing status, or the number of qualifying children after they have filed their 2020 returns will have the opportunity to update their CTC eligibility information in the same portal. If you are planning to unenroll from receiving the Advance CTC payments, you can follow the steps to unenroll here.

NOTE: IF YOU CHOOSE TO UNENROLL AND YOUR MOST RECENT TAX RETURN WAS A JOINT TAX RETURN, THE UNENROLLMENT PROCESS MUST BE REPEATED FOR BOTH THE TAXPAYER AND THE SPOUSE. Unenrolling is an individual action. If your spouse does not unenroll, they will receive payments for their portion of the Advance Tax Credit. 


If you have questions regarding what would be best for your situation, please Contact Us to discuss your specific situation.

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