Child Tax Credit for 2021

Blue Trust is pleased to join with Blue & Co. CPAs to provide timely and relevant content to our readers.

If you have children, then new changes to the Child Tax Credit may affect you. The recently passed American Rescue Plan Act (ARPA) of 2021 expands the Child Tax Credit (CTC) for tax year 2021 only.

The expanded credit means:

• The credit amounts will increase for many taxpayers.
• The credit for qualifying children is fully refundable, which means that taxpayers can benefit from the credit even if they do not have earned income or do not owe any income taxes.
• The credit will include children who turn age 17 in 2021.
• Taxpayers may receive part of their credit in 2021 before filing their 2021 tax return.

Rather than receiving the full 2021 Child Tax Credit on your 2021 tax return, you will receive a portion of the credit now. Beginning in July, advance payments of the credit were distributed and will continue regularly through December to eligible taxpayers. The total of the advance payments will be up to 50 percent of the Child Tax Credit and are estimated based on your most recent filed tax return (2020 or 2019 if applicable).

The maximum enhanced credit is $3,600 ($300 per month) for children younger than age 6 and $3,000 ($250 per month) for children between ages 6 and 17 for 2021. Most families will receive the monthly installments between July and December and the remainder when they file their 2021 taxes next year.

The IRS has a CHILD TAX CREDIT UPDATE PORTAL you can visit to find out more and check if you’re enrolled to receive advance payments, unenroll to stop getting advance payments, and provide or update your bank account information for monthly payments starting with the August payment.

Please contact Blue & Co. CPAs at INFO@RONBLUECPA.COM or 714.543.0500 if you have any questions about this credit or if you would like for them to run an evaluation of how these provisions might apply to you.