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Advance Child Tax Credit Payments 2021

The IRS is starting to pay qualified individuals an Advance Child Tax Credit Payment this week. ACCC explains the most important information consumers need to know about these payments:

advance child tax credit

Advance Child Tax Credit Info:

What is being planned?

  • The IRS will pay half (50%) of total Child Tax Credit you are expected to receive in 2022, starting in July of 2021. They will pay monthly amounts to all eligible families.
  • You will be automatically enrolled in this payment plan and will receive your first payment on July 15, 2021 UNLESS you request to be taken off the list for now. You will still be eligible to receive your CTC in 2022 as normal, if you unenroll.
  • Everyone will be contacted soon via a letter (called Letter 6417) to inform them of this process and what you can expect. The date is unknown at this time.
  • The IRS plans to release additional materials and information soon to all US organizations, non-profits, community groups, employers, associations, educational groups, etc. The dates for this are unknown at this time.
  • In January 2022, you will receive another letter (called Letter 6419) informing you of all CTC monies paid to you in 2021.
  • Here is an example of the payments expected:
    • If you had a qualifying child of 5 or under, you would receive $300 per month starting on July 15.
    • The full amount of $3600 is split in half to $1800, and then this is divided by the remaining months in 2021 (6). You will receive $300 each month for each child 5 or under, and $250/month for each child aged 6 – 17.

What is the process?

  • The IRS will base its estimate of what you should receive on your 2019 and 2020 tax returns. If these have been filed, do nothing else.  If these have not been filed, then by filing them, you will automatically be enrolled.
  • When you complete your 2022 tax filings, any adjustments to what you were paid will be made (if paid too much, will owe money, if paid too little, will receive money).
  • Your money will be deposited directly to your bank account each month (see dates below) if the IRS knows your account number. You can either update their records by adding your account number (see CTC UP below) or simply receive a paper check.

Who is eligible?

  • You must have children who are 17 or younger by 12/31/21. You must have lived in the US for more than half the year.
  • The child is the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendent of any of them (e.g., a grandchild, niece, or nephew) and is properly claimed as a dependent.
  • Having made money in 2020 or 2021 in not required to receive the CTC.
  • How do I know if I am eligible? Use the Advance CTC Eligibility Assistant on the IRS website.

What if I don’t want to receive the advance payment?

  • You can unenroll from this 2021 payment by visiting the IRS portal CTC UP (Child Tax Credit Update Portal). This is found on the IRS website.

What scams should I be aware of?

  • The IRS does not contact people via email, text messages, or social media, so any requests through these platforms to gain information or to “help you” are scams.

How do I update / change the system?

  • Use the CTC UP (Child Tax Credit Update Portal) found on the IRS website. This can be used to:
    • Unenroll from payments
    • Make changes to your bank information, address, dependents, marital status, and income

What is the amount?

  • $3600 for children ages 5 and under at the end of 2021.
  • $3000 for children ages 6 through 17 at the end of 2021.
  • If your AGI (adjusted gross income) exceeds $150K (married joint), $112.5K (HoH), or $75K (single), then the payment reduces to $2000 per child. This is called the “First Phaseout”.
  • If your AGI exceeds $400K (married joint) or $200K (all others), then the CTC is reduced by $50 for every $1000 over your threshold. This is called the “Second Phaseout”.

What are the 2021 dates of Payment?

  • July 15
  • August 13
  • September 15
  • October 15
  • November 15
  • December 15

Is my CTC subject to garnishment?

  • The CTC is not exempt from garnishment by non-federal creditors under federal law, but your CTC will not be offset by past-due child support.
  • If you filed separately as a couple, and you have custody of the children, your CTC will not be offset by debts your spouse owes.
  • If you filed a joint 2021 return and receive a refund, this is subject to offset for tax debts or other federal or state debts your spouse owes. You can file Form 8379 with your 2021 tax return to gain your monies.
  • If you have received CTC payments but then the qualifying child moved in with the other parent in mid-year (e.g., March 2021), then you must ask that parent to complete Form 8332 to Release the Claim to Exemption to you. Or if you are not the custodial parent, you can also go to CTC UP and unenroll from future payments.  If these are not processed correctly, it is possible that you may need to repay the IRS advance CTC that you were not due, when you file your 2021 returns.

For additional questions about the Advance Child Tax Credit, please visit IRS.gov.

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