By: Eunice Go

Beginning on July 15, 2021 the Internal Revenue Service (IRS) will allow certain taxpayers to sign up for monthly advance child tax credit (CTC) payments through an online tool. This Child Tax Credit Non-Filer Sign-Up Tool is available to taxpayers who are not required and do not plan to file individual income tax returns for 2019 or 2020, and who have a primary home in the US for over six months per year. The tool may also be used to claim 2020 recovery rebate credit and third-round economic impact payments.

The CTC online tool should not be used by taxpayers who meet one of the following conditions:

• Have filed or will file a 2020 tax return.
• Claimed all dependents on a 2019 tax return.
• Were married at the end of 2020, unless they use the tool with their spouse and include the spouse’s information.
• Are a resident of a US territory.
• Do not have a main home in the US for more than half the year, and neither does their spouse, or
• Do not have a qualifying child born before 2021 who had an social security number (SSN) issued before May 17, 2021.

Taxpayers using the CTC tool must enter their personal information to check for validity, including their name, current mailing address, date of birth, valid social security numbers for themselves and their dependents, bank account number and routing number, and their identity protection personal identification number (IP PIN), if issued one earlier this year.

who is eligible for the advance child tax credit?

Nearly 90% of American families with dependent children under 17 are eligible for the advance CTC. Families must make less than the following adjusted gross income to receive the full monthly payment:

• Individual filers: $75,000
• Heads of household: $112,500
• Married taxpayers and widows/widowers filing jointly: $150,000

The amount of the credit is reduced by $50 for every additional $1,000 in adjusted gross income earned per year. The CTC phases out completely at adjusted gross incomes of $95,000 for individuals, and $170,000 for joint filers.

increased ctc payments  

Under recent American Rescue Plan Act (ARPA) legislation, the IRS will make periodic advance CTC payments for 2021 to taxpayers up to the annual advance amount. Advance child tax credit payments will be made beginning July 1, 2021 through December 31, 2021 for $300 per month per child under the age of six, and up to $250 per month per child ages six through 17.

For tax year 2021, ARPA increased the child tax credit to up to $3,000 for each qualifying child between age six and 17, and $3,600 for each qualifying child younger than six at the end of the 2021 tax year. The child tax credit for 2021 is fully refundable if the taxpayer’s principal place of residence is in the US for more than one-half of the 2021 tax year.

Conclusion

Most taxpayers with children are eligible for the advance child tax credit, and signing up to receive payments is easy. Contact your trusted Chugh CPAs, LLP professional for further questions.