Advance Child Tax Credit Payments To Begin
The IRS recently announced that the 2021 advance child tax credit payments, which were provided for in the American Rescue Plan Act (ARPA), will begin on July 15, 2021. The IRS also specified some additional information about these payments.
Notably, the child tax credit, which ARPA temporarily expanded and made refundable for 2021, is allowed for each qualifying child. The credit phases out for taxpayers with adjusted gross income over $110,000 in the case of joint return filers, $75,000 in the case of a single filer, and $55,000 in the case of a married individual filing separately. For 2021, a qualifying child is defined as one under age 18, whom the taxpayer may claim as a dependent (i.e., a child related to the taxpayer who, generally, lived with the taxpayer for at least six months during the year), and who is a U.S. citizen or national, or a U.S. resident.
The IRS is required to establish a program to make periodic advance payments (which in total will equal 50% of the IRS’s estimate of the eligible taxpayer’s 2021 child tax credit) during the period July 2021 through December 2021. Such payments will be made on the 15th day of each month unless that day falls on a weekend or holiday, in which case they will be made on the next weekday. Recipients will receive the payments through direct deposit, paper check, or debit cards, though the IRS has stated that it is committed to maximizing the use of direct deposit.
While most taxpayers will not be required to take any action to receive their payments, the IRS says that it will continue outreach efforts with partner organizations over the coming months to make more families aware of their eligibility.
Please contact your MSPC advisor should you wish to discuss your utilization of this expanded child tax credit.