Expedient Tax Services, LLC

2021 Child Tax Credit Stimulus Payments

How much will I get and when?

By now, millions of American families have received monthly advance Child Tax Credit payments, which will continue into December. You may think you’re all set knowing how much you’ll get each month. But how will the Child Tax Credit changes affect your 2021 tax return? And, should you be doing something now with your Form W-4 to account for these changes to avoid a surprise at tax time?

Child Tax Credit: Changes and Impacts

As part of changes from the March 2021 stimulus bill, the value of the credit as well as the age limit have increased. The CTC is now fully refundable, which means you can receive the credit even if you don’t owe the IRS.

Specifically, half of the credit will be distributed in advance of the 2022 filing season (when you’d file your 2021 return). In fact, nearly 90% of children in the U.S. will be covered by advance payments of the credit according to the IRS.

With news of the advance Child Tax Credit stimulus payments comes questions: How much will we get? When will the Child Tax Credit advance payments be sent? Where will our money go and how do we update our information?

Before we jump into the details, let’s cover the W-4 question. As you may know, your Form W-4 withholding determines how much of your tax is paid with each paycheck. Because the advance payments could decrease the credit claimed on the tax return, the IRS has stated the following . . .

Those who received a small refund or had a balance due when they filed their 2020 tax return should consider one of the following options:

  • unenrolling from advance Child Tax Credit payments,
  • updating their Form W-4 by entering an additional amount to be withheld each pay period on step 4c of the form, or
  • making quarterly estimated tax payments for the remainder of 2021.

Tax prep tip: In January 2022, the IRS will send you IRS Letter 6419 to report your total amount of advance Child Tax Credit payments. Be sure to keep it so you can refer to it when you file your return.

New 2021 Child Tax Credit and Advance Payment Details

Child Tax Credit amounts will be different for each family

     1. Your amount changes based on the age of your children. The payment for children:
  •  Ages five and younger is up to $3,600 in total (up to $300 in advance monthly)
  • Ages six to 17 is up to $3,000 in total (up to $250 in advance monthly)

     2. Your amount changes based on your income. You’re eligible for the full amount if your Modified Adjusted Gross Income is under:

  • $150,000 for Married Filing Jointly or Qualified Widow(er)s
  • $112,500 for head of household filers, and
  • $75,000 for single and Married Filing Separate