What you need to know about the changes to the child tax credit for 2021.

July 22, 2021

The American Rescue Plan Act of 2021 modifies several tax provisions, including changes to the child tax credit for 2021. Currently these changes will only apply to the 2021 tax year, but there are a few things you should know to help you prepare.

The American Rescue Plan increases the amount of the child tax credit to $3,000 per child (or $3,600 for a child under the age of six) and makes the credit amount fully refundable. The American Rescue Plan also increases the maximum age of qualifying children to include 17-year old children.

The credit is phased out gradually for those making over $150,000 for joint filers, $112,500 for head of household filers, and $75,000 for single filers. Click here to read about this aspect in more detail on the IRS website.

The Treasury and IRS are directed by the American Rescue Plan to issue advance monthly payments of half of the credit amount beginning on July 15, 2021 – December 15, 2021. Eligible families will automatically receive monthly payments of up to $300 per month for children under 6, and up to $250 per month for children over 6.

Because this is an advance payment on your tax refund, we will need record of these payments when we prepare your 2021 individual tax return. If you prefer, you can also unenroll from receiving these payments here.

If you have any questions on how the changes to the child tax credit under the American Rescue Plan affect you, please contact our office. You can also access additional helpful information from the IRS on this matter here.