Advanced Child Tax Credit

In 2020, the Government enacted the American Rescue Plan. The crux of this plan was designed to assist qualified Americans during the historic COVID-19 Pandemic that struck worldwide in early 2020. Significant numbers of people lost their jobs due to government mandated shutdowns or even because of a fear of the unknown and what was to come. Now, almost 18 months later, we are still dealing with many of the issues that we dealt with when this entire ordeal began. One of the biggest issues Americans are constantly dealing with is a lack of monetary resources.

Thus, the Government went a step further and began a new program that is geared towards helping people keep food on their table, a roof over their head, and other crucial necessities that many are unable to afford. The Government enacted a program commonly known as the Advance Child Tax Credit. Below we go through a brief Q&A session in order to better familiarize you with some crucial details of this program.

  1. What is the Advance Child Tax Credit Payments?

    1. For qualified filers, you are eligible to claim a Child Tax Credit on your tax return, specifically the 2021 tax return. What this program does is give you an advance of that credit during the second half of 2021 (July – December). The Advance would send you payments during those 6 months (one per month) totaling 50% of the estimate that you would claim when you file your 2021 tax return.
  2. Do I need to do anything to receive this advance Child Tax Credit?

    1. For most people, the answer is no---if you are eligible for the advance based on your 2020 tax return or 2019 tax return, you should receive those payment without taking any further action. However, if you haven’t filed a tax return for both 2020 and 2019, you will need to file a return in order to receive the advance payments, even if you aren’t required to file a return. For those that are not required to file tax returns but still would like to receive their advance of the Child Tax Credit, the IRS developed a simplified return that can be filled online. To access this portal, please click HERE.
  3. What if I have no income?

    1. That’s fine---you can still be eligible to receive the advance on the Child Tax Credit. But remember as we discussed above, you must file a return!
  4. If I don’t want to use the online portal to file a simplified return, who can I reach out to for help filing my return?

    1. Do your research. With the advancement of the internet, we now have an abundance of resources at our fingertips. Look around your local area for a CPA, tax preparer, enrolled agents, or even tax attorneys. Read reviews. Go through their websites. Make some calls and interview your options. If you can’t find someone that fits your needs in your local area, broaden your search parameters.
  5. I am eligible for the advance on the Child Tax Credit but I don’t want to receive it as an advance---what do I do?

    1. Prior to the first payment being made, you are allowed to unenroll in the program. If you did this, you would then not receive the monthly payments during July 2020 – December 2020 but instead, you’d claim the entire amount when you file your 2021 tax return.
  6. Is there a timeframe on when the payments will begin?

    1. Yes, The advance payments will begin on July 15, 2021. The payments will be made monthly and will continue through December 2021.
  7. If I receive these advance payments, will I be barred from receiving government benefits?

    1. No, These advance payments on the Child Tax Credit cannot be computed as income when determining the eligibility of other government benefits/assistance.
  8. Am I eligible to receive the Advance Child Tax Credit payments?

    1. The main qualifying factor is your Adjusted Gross Income from your tax return for 2020 or 2019. The maximum amount of the credit is available to the taxpayers who have an AGI of the following:
      1. Single Person - $75,000 or lower
      2. Head of Household - $112,500 or lower
      3. Married, filing joint OR Qualified widows or widowers - $150,000
    2. Above those figures, the advanced credit gets lowered by $50.00 for every extra $1,000 in AGI.
  1. How much money does the Child Tax Credit provide?

    1. When the American Rescue Plan was passed, the maximum Child Tax Credit amount was increased to $3,600 for qualifying children under 6 years of age and to $3,000 for each child between 6 years of age and 17 years of age.

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