The Internal Revenue Service (IRS) and U.S. Department of Treasury (Treasury) have developed several online tools and resources designed to assist families with the enhanced Child Tax Credit for the 2021 tax year. The credit is part of the American Rescue Plan Act of 2021 (the “Act”) signed into law by President Biden earlier this year. In addition to increasing the credit for eligible families, the Act provides for half of the credit to be distributed this year through monthly payments beginning July 15, 2021. In most cases, eligibility is based on 2020 returns, or 2019 returns for taxpayers that have yet to file this year.
The first tool, the Advance Child Tax Credit Eligibility Assistant, is designed to help families determine eligibility for the enhanced Child Tax Credit. Taxpayers that use this interactive tool can quickly determine whether they qualify for the credit by answering a series of questions about their family. The Child Tax Credit Eligibility Assistant does not request personally-identifiable information, nor does the IRS retain user answers or tool results.
Families that are not required, and do not plan, to file a 2020 federal tax return due to income level are encouraged to use the Child Tax Credit Non-Filer Sign-Up Tool to determine eligibility. If the non-filer is found to be eligible for the credit, the IRS will automatically issue advance payments based on the information provided through the tool.
The Child Tax Credit Update Portal is a tool that enables users to view their eligibility and advance payment amount. It also allows users to update personal and bank information, and unenroll from advance payments.
Those that choose to unenroll from receiving advance payments will claim the full credit amount when filing their 2021 tax return. Unenrollment applies on an individual basis; therefore, for married couples filing jointly, BOTH the taxpayer and spouse must unenroll. If one fails to do so, the other will still receive the advance payments.
Taxpayers that miss the initial June 28th unenrollment deadline can still do so; however, they will receive advance payments beginning July 15th and each subsequent month until the IRS processes their request. Additionally, taxpayers that opt-out from receiving monthly payments will be unable to reenroll until the end of September 202; therefore, they will not receive advance payments in July, August, or September.
For more resources and guidance, visit the 2021 Child Tax Credit and Advance Child Tax Credit Payments webpage.
Still have questions? At Price Kong, we are ready to help navigate these changes and answer any questions you may have regarding the child tax credit. For assistance, please send us at email or call 602.776.6300.
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