All about the 2021 child tax credit

How much you’ll get and how advance payments work

Derek Silva

By

Derek Silva

Derek Silva

Personal Finance Expert

Derek is a personal finance editor at Policygenius in New York City, and an expert in taxes. He has been writing about estate planning, investing, and other personal finance topics since 2017. He especially loves using data to tell a story. His work has been covered by Yahoo Finance, MSN, Business Insider, and CNBC.

Updated June 30, 2021|10 min read

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The child tax credit (CTC) is available to parents of minor children. There are a number of changes to the CTC in 2021 because of the American Rescue Plan Act of 2021, which President Biden signed into law on March 11, 2021.

For 2021, the maximum child tax credit is $3,600 per child age five or younger and $3,000 per child between the ages of six and 17. In previous years, 17-year-olds weren’t covered by the CTC. The CTC income limits are the same as last year but there is no longer a minimum income, so anyone who’s otherwise eligible can claim the child tax credit. The credit is also fully refundable. That means if your child tax credit is worth more than the amount of tax you actually owe for the year, you will receive the excess credit as a tax refund. In previous years there was a limit to how you could receive as a refund.

Additionally, people who are eligible for the 2021 CTC will automatically receive monthly advance payments, lasting from July to December, worth up to $300 per month per child.

Below we’ll explain who is eligible for the 2021 child tax credit and tell you everything you need to know about the CTC advance payments.

Key Takeaways

  • The 2021 child tax credit is available for parents and guardians with children who are under age 18 and have a Social Security number

  • The maximum child tax credit is $3,600 per child under age six and $3,000 per older child

  • Most people will receive half of their eligible CTC through advance monthly payments starting in July and going through December 2021

  • The IRS has created three online portals that allow you to check your eligibility, sign up, or opt out of advance payments

Who qualifies for the 2021 child tax credit?

Parents and guardians can qualify for the child tax credit in 2021 if they meet the income requirements and if their children are eligible dependents.

Qualifying children

For 2021, a legal dependent who is age 17 or younger (as of December 31, 2021) can qualify for the child tax credit. This is the first year that 17-year-olds qualify for the CTC (the previous age limit was 16). Children also must have a Social Security number (SSN) to qualify for the 2021 child tax credit. [1] This requirement is the same as in previous years. Children with ITINs aren’t eligible for the child tax credit in 2021. Parents do not need to have SSNs, only the children do.

Learn more about who you can claim as a dependent.

Income requirements

The income requirements for the 2021 CTC depend on your tax filing status and your modified adjusted gross income. There is a new tiered structure so that lower-income filers receive the increased credit amounts, and then there is a quick phaseout for people with moderate incomes before the maximum credit plateaus at $2,000 for people who earn closer to the income limits. There is no minimum income for the 2021 tax credit. (The minimum income for 2020 was $2,500.)

As an example, a married couple with a five-year-old child can only receive the new maximum CTC of $3,600 if their income is less than $150,000. The maximum credit then phases out for couples with an annual income between $150,000 and $182,000 until it plateaus at $2,000 for a couple with income between $182,000 and $400,000. [2]

2021 child tax credit income limits

Filing statusIncome limit for increased creditIncome limit for $2,000 creditIncome limit for partial credit
Single$112,500$200,000$239,999
Head of household$112,500$200,000$239,999
Married, filing jointly$150,000$400,000$439,999
Married, filing separately$112,500$200,000$239,999
Qualified widow(er)$150,000$400,000$439,999

Like last year, married filers can get a child tax credit of at least $2,000 with income of $400,000 or less. The CTC starts phasing out at an income of $400,000 and is no longer available once your income hits $440,000. Unmarried filers can get a credit of at least $2,000 with income of $200,000 or less. The credit phases out once your income hits $200,000 and it’s no longer available once your income reaches $240,000. These phaseouts are the same as in 2020.

Learn more about the difference between married filing jointly and married filing separately.

How much is the 2021 child tax credit?

Your maximum child tax credit depends on the age of your children. Parents and guardians with a child age five or younger can receive a maximum credit of $3,600 per child in that age range. The maximum credit is $3,000 per child who’s between the ages of six and 17.

As an example, the maximum possible credit for a parent with a five-year-old child and an eight-year-old child would be $6,600 ($3,600 for the five-year-old plus $3,000 for the eight-year-old).

Maximum child tax credit in 2021

Age of childMaximum credit per child
0-5 years old$3,600
6-17 years old$3,000

The 2021 child tax credit is also a fully refundable tax credit, so if you’re eligible for a credit that’s worth more than the total amount of tax you owe, you can still receive the excess credit as a tax refund. (In previous years, only up to $1,400 was refundable.)

All about the advance payments for the 2021 CTC

Most people who are eligible for the child tax credit will receive an advance payment each month starting in July and lasting through December 2021. As with the COVID-19 stimulus checks, if the IRS already has information on your dependents and income from last year’s tax return, you likely don’t have to do anything to receive these payments.

How much are the advance payments?

The advance payment is up to $300 per month per child age five or younger, and up to $250 per month per child age six to 17. In total, your six monthly payments should add up to half of your eligible child tax credit. You can then claim the second half when you file your 2021 taxes (in early 2022).

Your exact advance payment amounts are determined using your 2020 taxes. If you didn’t file your 2020 taxes yet, the IRS will use the income on your 2019 taxes. (Tax Day was May 17, 2021, so you should pay your 2020 taxes as soon as possible to avoid late fees.)

Maximum advance payment for 2021 child tax credit

Age of childMaximum monthly payment
0-5 years old$300 per child
6-17 years old$250 per child

Do I need to opt in to get my advance payments?

Most people will automatically receive payments. According to the IRS, about 88% of households eligible to receive the child tax credit will automatically get advance payments. [3]

If you didn't file a tax return for 2019 or 2020, you will need to use the IRS' Non-Filer Sign-up Tool, which is an online portal that helps you determine eligibility and sign up for the advance payments. Don't use this tool if you filed a tax return for 2019 or 2020, unless you have a new dependent that you didn't previously report. You also shouldn't use this tool if you used the IRS' non-filer tool in 2020 to receive a COVID-19 stimulus check (unless you used that that tool but didn't claim all your eligible dependents).

How do I know if I will receive payments?

You should received a letter from the IRS (called Letter 6417) in June that will state the amount of your advance child tax credit payments. If you don't receive this letter, you likely won't receive the payments. [4] It's also possible to check whether you're scheduled to receive payments by using the IRS' Advance Child Tax Credit Eligibility Assistant.

When will I get my advance payments?

The IRS will begin sending payments on July 15, 2021. It may take a few days to reach your account depending on your financial institution. If you receive paper checks, you may need to wait longer.

Below is the full list of 2021 child tax credit advance payment dates: [5]

  • July 15, 2021

  • August 13, 2021

  • September 15, 2021

  • October 15, 2021

  • November 15, 2021

  • December 15, 2021

Where will I get my advance payments?

If you already filed your 2020 taxes (which were due in early 2021) then the IRS will send your advance CTC payments to the same bank account where it sent your tax refund. If you received your refund as a paper check, you will get the payments as checks mailed to that address.

If you didn’t receive a refund or if you haven’t filed your 2020 taxes yet, the IRS will send your payments to the most recent bank account or address on file. If a payment goes to a bank account you no longer have, the bank should return the payment to the IRS, which can then mail you a paper check. For people who don't usually file taxes, there is a Non-Filer Sign-up Tool where you can enter your payment information.

Can I change my direct deposit information?

Yes. The IRS has created the Child Tax Credit Update Portal, which allows you to update your bank account for direct deposit. However, you cannot change where your July payment is sent. Changes you make won't take effect until your August 13 payment.

The IRS expects to update the portal so that you will be able to change your mailing mailing address starting in early August.

What if my income or number of dependents changed from 2020?

Currently, there is no way to update your income information. However, later this summer the IRS' Child Tax Credit Update Portal may allow you to update your expected 2021 income and the number of dependents you expect to claim for 2021. We will share more details as the IRS shares them.

Do older dependents qualify for advance payments?

No. Adult dependents still only qualify for the $500 credit for other dependents (ODC) and that credit is not eligible for advance payments. (Check for other credits and deductions you can claim in 2021.)

Do I need to pay tax on my advance payments?

No, these payments aren't taxable income.

Will I need to repay the advance payments?

You could have to repay your advance payments if you end up receiving more than you are eligible for. This may happen to you if your income increases greatly from 2020 to 2021 or if you end up claiming fewer dependents on your 2021 taxes than you expected to.

For example, you may have to repay excess credit if you lose custody of a child during the year and can no longer claim them as a dependent for 2021, but you still receive advance payments based on having that dependent.

However, if you receive excess payments because you claimed too many dependents, you may not have to pay back the excess. There is a new safe harbor rule that protects low- and moderate-income taxpayers from having to pay back excess child tax credit just because they claimed too many dependents.

Can I opt out of advance payments?

Yes, you can opt out of the advance child tax credit payments using the Child Tax Credit Update Portal. Using the portal requires you to have an IRS username or an ID.me account, which you can create if you don't already have one. You will need photo identification when creating an account.

Should I opt out of advance payments?

There are certain situations where you may want to consider opting out of the child tax credit advance payments:

  • You expect your 2021 income to be above the CTC income limits.

  • You claimed a dependent on your last tax return but won’t claim them on your 2021 taxes.

  • You usually owe a tax bill when you file taxes. In certain situations, people who usually owe taxes at the end of the year or receive a small tax refund could end up owing more if they get advance payments and don’t update their W-4 from 2020. (See information below about updating your W-4.)

  • You prefer to receive your tax credit as one lump sum on your tax return instead of throughout the year.

Do I need to update my W-4?

If you claimed the child tax credit in a previous year and usually get a refund of about $500 or less, you may also want to update your 2021 W-4 for 2021 to avoid withholding too much and having to pay back some of your advance payments. Your W-4 form tells your employer how much tax to withhold from your paychecks and you filled it out when you first joined your company.

As an example, let’s say you will qualify for a $3,000 child tax credit in 2021 but you don’t update your W-4, so it says that you will qualify for a $2,000 credit (based on the 2020 CTC). Your employer won’t withhold taxes on that $2,000. Combined with the $1,500 you will receive from the six months’ worth of advance payments, by the end of 2021, you will have effectively claimed a total credit of $3,500. But since you only actually qualify for a $3,000 credit, you will have to repay the extra $500 when you file your 2021 taxes. If your total tax refund at the end of the year is already less than $500, you would end up owing a tax bill because of that extra $500 credit you claimed.

Here’s how to fill out your W-4.

How will filing taxes change next year?

Here’s the general process to expect when claiming the child tax credit on your 2021 tax return:

When you claim the child tax credit on your 2021 taxes, you will calculate the exact credit you qualify for based on your final 2021 income, subtract the amount of your advance payments (since the advance payments are technically just prepayments of your child tax credit), and then the remaining amount will further reduce your tax liability (how much tax you owe for the year). Ideally, you should have received half of your eligible CTC through monthly payments and then you can claim the second half as a lump sum when you file your taxes.

Because the 2021 CTC is fully refundable, tax filers who previously claimed the additional child tax credit (ACTC) likely won’t need to claim it for 2021. Otherwise, most people won’t notice dramatic changes on their 2021 taxes.

For more on filing your taxes, read our guide to filing income taxes.