News from the I.R.S. about Advanced Child Tax Credit Payments

Public Service Announcement Vol. I

May 26, 2021

Updated June 28, 2022

The Advance Child Tax Credit monthly payments described below are, unfortunately, no longer being sent out beginning in 2022, but the remaining portion of the expanded Child Tax Credit may be claimed by eligible individuals on 2021 tax returns. I wrote about these and other tax credits recently, and you can find the full article below.

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Just over one year ago, Congress passed one of the most ambitious economic recovery packages in U.S. history to help the country avoid falling back into a pandemic-driven recession—the American Rescue Plan Act of 2021. Many of its provisions helped Americans last year, but it can also help working- and middle-class families this tax season. Although I h…

3 years ago · 2 likes · JJ Payne

The details below pertain to Child Tax Credit information I covered last year in this Public Service Announcement.

The Internal Revenue Service (IRS) recently announced news about the Advance Child Tax Credit monthly payments authorized in the American Rescue Plan. For qualifying households, this could mean up to $300 per month per qualifying child. These monthly payments are scheduled to begin as soon as July 15, 2021.

This excerpt from the initial IRS news release is a summary of key provisions and requirements for these payments:

There have been important changes to the Child Tax Credit that will help many families receive advance payments starting this summer. The 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 don't have earned income or don't 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.
For tax year 2021, families claiming the CTC will receive up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021. They will receive $3,600 per qualifying child under age 6 at the end of 2021. Under the prior law, the amount of the CTC was up to $2,000 per qualifying child under the age of 17 at the end of the year.
The increased amounts are reduced (phased out), for incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.

A more recent update stated the following:

The IRS will pay half the total credit amount in advance monthly payments beginning July 15. You will claim the other half when you file your 2021 income tax return. These changes apply to tax year 2021 only.

More information is available, and future updates will soon be released, at the following link:

https://www.ChildTaxCredit.gov

Households which were not required to file a 2020 tax return, and did not plan to do so, can follow the instructions on the Non-Filer Sign-Up Tool page here:

https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool

Share This Message

If you know anyone who has children, please pass along this news to them as well. The more people who know about these monthly payments, the fewer children will live in poverty, and the more people will be able to see the effects of a government and tax policies that work for them, rather than just the wealthy.

Although the IRS and U.S. Department of the Treasury estimate that households with 88% of all children in the country will automatically receive monthly payments, this means that the remaining households with up to 12% of children – including non-filers – might qualify but be unaware of these benefits. If we all reach out to our friends and family who might qualify, we can help increase awareness and reduce the number of families who miss out on these important benefits.

Disclaimer

I want to remind readers that this article and others in the Economic Justice and Progress Newsletter are written for educational and editorial purposes, and should not be considered accounting, tax, financial, or legal advice. I do not work for the IRS, nor am I in any way affiliated with the IRS; I am simply writing this to raise awareness of an important issue. Please ask your tax professional or use authoritative sources like the IRS website for more information before making any decisions impacted by this type of information.

Future Public Service Announcements

I wanted to start doing a Public Service Announcement (PSA) series in this newsletter to help amplify such messages and increase awareness of policies that could help families and children across the country. This CTC advance payment provision is quite different from how this tax credit has historically been handled, so I want to help ensure that as many families who qualify for it will benefit from the monthly payments.

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The Path Forward

While these changes to the Child Tax Credit are a great step in the right direction, they only apply to the 2021 tax year, and could otherwise be improved. Like I wrote previously, if we can cut childhood poverty in half with a single piece of legislation, should we accept increasing childhood poverty in 2022 and beyond after these benefits expire? And if we can reduce some of childhood poverty, why not eliminate it altogether?

Furthermore, why is the non-filer tool so poorly executed, especially when these non-filer households need the most help? We must collectively confront such questions as we approach midterm elections if we want to maintain political momentum for further progress.

I plan to address these and other topics in future newsletters. If you have thoughts on how we might improve this legislation, or how we might otherwise make a more just economy that works for everyone, feel free to leave a comment.