We hope everyone is doing well and enjoying your summer! As many of you already know the American Rescue Plan increased the child tax credit for 2021. The IRS has released additional information regarding this credit and the advanced payments in the last few weeks that we wanted to make sure everyone is aware of.

2021 Child Tax Credit:  

• How Much:  $3,600/child under the age of 6 or $3,000/child between 6 – 17
• Who is Eligible:  All taxpayers whose 2021 adjusted gross income is less than $75,000 (Single) or $150,000 (Married Filing Jointly).
• Frequently Asked Questions Issued by the IRS can be found here. Please make sure to read through these since there are many situations that require the credit to be repaid if you do not qualify.

The following Portals will allow you to determine your eligibility, opt out of the prepayment and update your personal information.

Child Tax Credit Eligibility Assistant Portal:

• What it provides:
  • Families can answer a selection of questions that determine their eligibility for the advanced payments.
  • This is simply an eligibility tool. It requires no personally identifiable information.

Child Tax Credit Update Portal:

• What it provides currently:
  • Families can verify their eligibility
  • Families can opt out from receiving the monthly payments instead receiving the full child tax credit of $3,600 and/or $3,000 on their 2021 tax return.
    • Keep in mind that if you file jointly and opt out of receiving the credit both spouses need to opt out.
  • Hughes Szuberla recommends opting out of receiving the advanced payment of the child tax credit if:
    • You are not going to be claiming the dependent on your 2021 tax return.
    • You are over the income thresholds for 2021.
    • Your main home is outside of the US for more than half of 2021. You do not qualify for the increased credit if you claim the foreign earned income exclusion (330 days or bonafide residency) for 2021. 
• Coming soon to the Portal Summer 2021:
  • The ability to update your mailing address, bank account information, family status (such as new dependents in 2021), and report any income changes.
• Items to Keep in Mind for 2021 Tax Returns:
  • In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.

Feel free to reach out with any questions you may have regarding the latest updates to the Child Tax Credit Advanced payments. We’re happy to help!