The Child Tax Credit is a tax benefit to help families who are raising children that was expanded in March 2021
The American Rescue Plan signed into law by President Biden expanded the Child Tax Credit for 2021 to get more help to more families. The American Rescue Plan:
- Increased the credit from up to $2,000 per qualifying child in 2020 to up to $3,600 for each qualifying child under age 6.
- Increased the credit from up to $2,000 per qualifying child in 2020 to up to $3,000 for each qualifying child ages 6 to 16.
- Makes 17-year-olds eligible for up to $3,000 in credit.
- To get money to families sooner, the IRS began sending the first-ever monthly payments (up to half of your total amount) this year, starting in July.
- Advance payments went to the families of over 61 million children from July to December 2021.
During 2021, the vast majority of eligible families received half of their Child Tax Credit through monthly payments
The changes made for 2021 gave tens of millions of families a portion of their 2021 Child Tax Credit through monthly payments—up to half the total estimated amount. In prior years, families could only receive their Child Tax Credit in a lump sum when they filed tax returns.
Whether they received monthly advance payments or not, eligible families can claim their remaining Child Tax Credit benefits when they file a tax return this year.
For 2021, all eligible families in need can receive the full credit.
Previously, millions of hard-pressed families got a smaller credit or no credit at all. Thanks to the American Rescue Plan, even families with less than $25,000 in income can get the full credit this year.
Child Tax Credit payments and your refund do not affect other Federal benefits
The monthly Child Tax Credit payments that families received last year, and any refund received when claiming the Child Tax Credit this year, will not be considered income for any family.
Receiving Child Tax Credit benefits will not change the amount you receive from any other Federal benefits, including unemployment insurance, Medicaid, SNAP (formerly food stamps), SSI, SSDI, TANF, WIC, Section 8, or Public Housing.
A child’s age determines the amount
A child’s age helps determine the amount of Child Tax Credit that eligible parents or guardians can receive. For 2021, eligible parents or guardians can receive up to $3,600 for each child who was under 6 years old at the end of 2021, and up to $3,000 for each child who was between the ages of 6 and 17.
Parents income matters too
The overwhelming majority of eligible parents or guardians are eligible to receive Child Tax Credits, though families with higher incomes—such as married couples with incomes above $150,000—may not receive the full expanded credit.
The IRS began sending advance monthly payments to parents and guardians in July 2021
Nearly 90 percent of advanced Child Tax Credit payments were paid through direct deposit. Payments were posted on the 15th of every month from July to December, or earlier when the 15th fell on a holiday or a weekend. For those who don’t use direct deposit, paper checks were mailed around the 15th of every month.
These payments were automatically sent to people who filed tax returns for 2019 or 2020 and claimed qualifying children on their return. Learn how to identify these payments in your bank account or paper checks.
Filing a tax return is how families will get all of the Child Tax Credit benefits that they are eligible for. Families that did not receive monthly payments can still claim the full amount of the Child Tax Credit they are eligible for when they file taxes.
Why have monthly Child Tax Credit payments stopped?
The American Rescue Plan increased the Child Tax Credit to $3,600 for qualifying children under 6 and $3,000 for qualifying children 6-17. It also provided monthly payments from July of 2021 to December of 2021. President Biden has proposed extending the enhanced Child Tax Credit. Families can still receive the entire 2021 Child Tax Credit that they are eligible for if they file in 2022. However, continuing enhanced benefits and monthly payments would require new legislation to be passed.
How to get your remaining Child Tax Credit
The only way to get the full amount of any remaining Child Tax Credit for which you are eligible is to file a tax return for 2021. When you are ready to file, you can use this tool to find free assistance filing for your Child Tax Credit.
Protections from Overpayment
The IRS used your 2019 and 2020 tax returns to estimate the monthly payments it made in 2021. The IRS made payments that it estimated to be one-half of the total Child Tax Credit that you may be eligible for. If your circumstances were different in 2021 than in past years, it is possible the amount of Child Tax Credit you are eligible for is different than the IRS’s estimate.
For example, if you made less money in 2021 than you did in 2020 you could be eligible for a larger credit when you file your tax return. Or if a child who lived with you in 2020 did not live with you in 2021, the IRS may have overestimated the credit you are eligible for. Either way, the best thing to do is to file your tax return.
In some limited cases taxpayers may have received payments larger than they are eligible for. In the American Rescue Plan, Congress anticipated this and ensured that single parents (“head of households”) making less than $50,000 and married couples making less than $60,000 would be protected from repayment. Additionally, Congress provided substantial relief from repayment for some families with incomes above those amounts.
Understanding the difference between Child Tax Credit payments, tax refunds, and Economic Impact Payments
The IRS sent automatic, advance monthly Child Tax Credit payments to eligible parents and guardians who filed their 2019 or 2020 tax returns and claimed qualifying children on their tax returns. This includes people who signed up for an Economic Impact Payment (sometimes called “stimulus checks”) or Child Tax Credit payments in 2020 or 2021 by using simplified filing tools such as The Child Tax Credit Non-filer Sign-up Tool or GetCTC.
This section will help you identify Child Tax Credit payments you have received and tell the difference from other tax benefits. You can use the IRS Child Tax Credit Update Portal to view your payment history and verify that a check has been mailed to you or that you have received direct deposits.
If you received direct deposits to your bank account
The code within the description of each direct deposit will tell you the difference between a 2021 Child Tax Credit payment, an Economic Impact Payment, and a tax refund. First, locate the deposit in your bank statement and read the description. If it says:
- IRS TREAS 310 CHILDCTC: This is a 2021 Child Tax Credit payment that may have been received monthly between July and December.
- IRS TREAS 310 TAXEIP3: This is an up to $1,400 per person Economic Impact Payment provided by the American Rescue Plan.
- IRS TREAS 310 TAX REF: This is a tax refund. You may have received this after your tax return was processed. Some individuals also received a payment from the IRS with this code as a result of tax relief provided for unemployment earnings in the American Rescue Plan.
If you received tax benefits payments by mail (Treasury check)
Locate the description on the check. Monthly Child Tax Credit payments said “Advance Child Tax Credit Payment” on them. Other payments you may have received from the IRS in 2021, like Economic Impact Payments and tax refunds will have different descriptions on the check (for example, “Economic Impact Payment” or “TAX RELIEF”).