The American Rescue Plan Act of 2021, signed on March 11th, provided $1.9 Trillion in funding aimed at combating the COVID-19 pandemic along with public health and economic impacts. An estimated $34.3 billion in funding went toward tax credits, of which included the child tax credit.
The US Department of Treasury and the IRS announced on May 17th that monthly payments will be available from July to December, then the remaining funds will be available with a 2021 tax return. Beginning on July 15th, 2021 the advance child tax credit payments will be made via direct deposit to eligible households.
Who Qualifies for the Child Tax Credit?
Eligibility for the Child Tax Credit includes those that are 100% eligible, as well as phase out limits. Please see below for the qualifications.
Fully Eligible Participants Adjusted Gross Income (AGI) Levels -
- Single: under $75,000.
- Head of household: $112,500.
- Married filing jointly: $150,000.
Participants Subject to Phase Out Adjusted Gross Income (AGI) Levels -
- First phaseout: Income exceeds the above thresholds but is below $400,000 (married filing jointly) or $200,000 (all other filing statuses).
- Second phaseout: Income exceeds $400,000 (married filing jointly) or $200,000 (other filing statuses).
In 2021, the child tax credit offers:
- Up to $3,000 ($250 monthly) per qualifying dependent child 17 or younger on Dec. 31, 2021.
- Up to $3,600 ($300 monthly) per qualifying dependent child under 6 on Dec. 31, 2021.
The Advance Child Tax Credit Payments
In accordance with the announcement made on May 17th, the IRS will allow for advance child tax credit payments from July 15th to December 15th, 2021. Participants 2020 Tax Return is utilized to determine how old each dependent is (if any) and how much credit to advance to each participant each month.
The IRS is utilizing the “Child Tax Credit Update Portal” to allow the participant(s) to add qualifying children to be claimed on their 2021 tax return, as well as add bank account information to dictate the flow of monthly funds.
Information from https://www.nerdwallet.com/article/taxes/qualify-child-child-care-tax-credit
Why ModernTax?
ModernTax provides solutions for businesses to access vitax tax information to better serve their clients. Our solutions curate data directly from the IRS database and is the official record based on reported income and historical filings. It requires no uploading of documents by applicants, no human in the loop, and eliminates 100% of fraudulent data.
Interested in learning more? Please contact blake.grewal@moderntax.io
.png)
