Important changes to the Child Tax Credit will help many families get advance payments of the credit starting this summer (2021). It is important to understand how this credit functions and to understand your eligibility for an advanced Child Tax Credit payment. The money you could receive may function as a great way to offset the cost of childcare throughout the year. In order to benefit from this new Child Tax Credit, you must meet certain requirements.
The child tax credit payments are a part of the American Rescue Plan Act which was signed into law in March of 2021. The new law increased the CTC for each child between the ages of 6 to 17 from $2,000 to $3,000, and $3,600 for children under 6. Payments for this will be based off of the previous years tax return. The payments are up to $300 a month per qualifying child under the age of 6 and up to $250 each month for each child from 6 to 17.
To qualify for these payments you must meet certain requirements such as:
- Child must not turn 18 prior to January 1st of the following year
- Child must be a taxpayer’s son, daughter, stepchild, foster child, stepson, stepdaughter, or a descendent of any of them (niece, nephew, grandchild)
- Does not provide more than one-half of his or her own support in the tax year
- Lives with the tax payer for at least half the year
- Is properly claimed as a dependent by the tax payer
People who are looking to benefit from the Child Tax Credit may be out of the modified adjusted gross income limits, as the CTC gets reduced $50 for each $1,000 your MAGI limit exceeds
- CTC reduced to $2,000 by
- $150,000 if married filing jointly
- $112,500 if filing as head of household
- $75,000 if you are a single filer
- CTC reduced below $2,000 by
- $400,000 if married and filing a joint return
- $200,000 for other filing statuses
