Call 225.925.TAX8

Watching Over What Counts – Your Trusted Tax Partner

Advance Child Tax Credit is really a 2021 Tax Credit

Understand that the advanced credit, is what is, a tax credit for the tax year 2021.   Thanks to the American Rescue Plan, signed by President Joe Biden, taxpayers may receive a portion of it in the form of an advanced credit.   The IRS will pay half the total credit amount in advance monthly payments.  We will claim the other half when you file your 2021 income tax return in the year 2022.   NOTE: advances received this year will impact your 2021 return when filing next year.  Some taxpayers may see a reduced refund, and some may owe at the filing time.  Learn more with the below are fact surrounding the credit, including the opt out option.

Advances are not subject to offset for:

  • Federal or state tax debts
  • Past due child support
  • Advances are subject to garnishment

Payment frequency – Monthly beginning on July 15 followed by August 13, September 15, October 15, November 15, December 15

  • A letter informing the taxpayer how much Advance Child Tax Credit they received in 2021 will be sent to the taxpayer by January 31, 2022. (Bring the letter to your Eagle Eye Tax Solutions Appointment)
  • IRS has a page dedicated to the Advance Child Tax Credit Payments on their website
  • Amount of monthly payment will be $250 for each child age 6 -17 and $300 for each child under age 6.
  • IRS will calculate the monthly payments based on their 2020 or 2019 federal return (whichever is last filed)
IRS has a dedicated page for the Advance Child Tax Credit which now includes a link to a page including FAQs such as:
  • Calculation of the Advance Child Tax Credit
  • Advance Payment Process of the Child Tax Credit
  • Updating your Child Tax Credit Information during 2021
  • Receiving Advance Child Tax Credit Payments
  • Reconciling Your Advance Child Tax Credit Payments on Your Tax Year 2021 Return
  • When you will be able to update information including bank account information
IRS Tools Related to the Advance Child Tax Credit
The IRS has created the following tools (available now) related to the Advance Child Tax Credit:
Individuals who are eligible to receive the Advance Child Tax Credit payment can use this tool to do the following:
  • Elect to opt-out of receiving advance payments. This means that you will receive the full credit as part of your refund when you file your 2021 federal tax return.
  • View their eligibility, enrollment status, and amount of monthly payment they will receive
  • Before the end of June, individuals will be able to change or add bank account information. Any changes made will go into effect for the August payment.
Additional functionality will be added in the coming months that will allow an individual to:
  • Update their Address information
  • Make changes to filing status, income, number of children and may re-enroll if they opted out earlier
  • Ability to re-enroll if they elected to opt-out earlier
To access this tool, an individual must first verify their identity. If the individual already has set up an account with the IRS they can use that login information to sign in. If they do not have an existing account, they will be asked to verify their identity with a form of photo identification using, a trusted third party for the IRS.
Anyone who cannot use the online tool may opt-out of receiving the Advance Child Tax Credit payment by contacting the IRS at 800-908-4184. The toll free number is in the top right hand corner of the Letter 6416 that they received in mid-June.

Child Tax Credit Eligibility Assistant Tool

This tool will allow an individual to determine if they are eligible for an Advance Child Tax Credit payment.
Individuals will be asked questions such as:
  • Last tax return filed
  • Are they a resident of a US territory
  • Did they claim Child Tax Credit on their 2019 or 2020 return
  • Filing status
  • Estimated AGI
  • Questions about children

Child Tax Credit Non-Filer Sign Up Tool

This tool is designed to help eligible individuals who do not normally file tax returns register for the monthly Advance Child Tax Credit payments.
It is an update of last year’s IRS Non-filers tool that was used for the Economic Impact Payments. This tool is for individuals who did not file a tax return for 2019 or 2020 and who did not use the IRS Non-filers tool last year to register for Economic Impact Payments. The tool enables them to provide required information about themselves, their qualifying children age 17 and under, their other dependents, and their direct deposit bank information so the IRS can quickly and easily deposit the payments directly into their checking or savings account.

About the Author

ShantaView all posts by Shanta