2021 Monthly Child Tax Credit (CTC) – $3000 to $3600 Payment Increase

This article was last updated on March 1

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2021 CTC Increase

[Updated following finalization of Legislative Bill] In response to providing support to families during the COVID pandemic, President Biden and the Democrats have draft legislation via the ARP Stimulus package to expand the current Child Tax Credit (CTC) to $3,000 annually per child (or $250 monthly) between the ages of 6 and 17, while increasing it to $3,600 for children under the age of 6 (infants), equivalent to $300 monthly. The IRS will make these payments on a monthly basis versus eligible recipients having to claim the credit via their tax return on an annual basis.

Currently the CTC is $2,000 per eligible dependent child under the age of 17. The credit begins to phase out for those whose incomes (AGI) is above $200,000 (singles)/$400,000 (joint return). Up to $1,400 of the child credit is refundable for some lower-income individuals with children, but these people must also have earned income of at least $2,500 to get a refund.

2021 CTC Changes

The new Biden stimulus package would make the following temporary changes to the CTC payments in 2021

  • Expands eligibility to 17-year-old children (vs 16 or under per current CTC rules)
  • Increase the credit to $3,000 per child older than 6 and $3,600 per child under the age of 6.
  • Remove the $2,500 earned income minimum requirement.
  • The CTC would be fully refundable.
  • Half of the credit to be paid in advance between July 2021 to December 2021 (you would need to show it as paid in your 2021 tax return filed next year)

While funding for the above (around $120 billion) has yet to be approved by Congress as part of Biden’s COVID relief bill, it would only be a temporary increase. Further the income eligibility rules may be adjusted (similar to stimulus checks) to ensure the increased amount reaches the families who need it the most. A similar increase is also proposed to the Earned Income Tax Credit (EITC).

Note that the above payment would be in addition to the $1400 dependent stimulus check (economic impact payment) that is also in the latest stimulus bill. So in total some families could be getting close to $5000 per child in 2021 with these two payments! See more in this video on how some families could get up to $10K with these credits.

Special Monthly CTC Income Qualification Thresholds

The amount of the credit allowable shall be reduced by $50 for each $1,000 (or 5% of credit) for Taxpayer’s Income (MAGI) exceeds the maximum credit threshold amount.

2019 or 2020 Tax Filing StatusIncome Below Which Full CTC Is Paid (5% Phase-out applies after this)
Single or Married filing separate$75,000
Head of household$112,500
Married filing jointly$150,000
2021 CTC Stimulus Income Qualification Thresholds

2020 or 2019 Tax Year Data

The IRS will use 2019 or 2020 tax data (file your tax return via TurboTax) to ensure the latest dependent and payment information can be used. However any dependent 17 or younger at the end of 2021 is eligible for the expanded CTC, which is considered an advanced refundable credit against your 2021 taxes. You won’t have to pay taxes on it, but can also be claimed in your 2021 return as a recovery rebate credit if you don’t get it for some reason this year.

Families that aren’t eligible expanded CTC due to income levels or other reasons would still be able to claim the regular CTC credit of $2,000 per child, less the amount of any monthly payments they got, provided their 2020 AGI is below the current thresholds ($200,000/$400,000).

More to come as the legislation is passed through Congress and I will update with more information

4 thoughts on “2021 Monthly Child Tax Credit (CTC) – $3000 to $3600 Payment Increase

  1. Hi Andy,
    Just curious. My tax individual at H&R Block has already filed my income tax. will this cause me to v=be ineligible for EITC and CTC? in 2021? and what amount do you have to make to qualify in regular payroll wages for EITC? What if my tax guy was unaware of this new roll out.
    You are so awesome by the way. The only form of information I have #1 had and #2 feel I can trust.

    1. No. Your 2020 tax return filing should not impact your 2021 payments as they will be reconciled against your 2021 tax return in 2022. The one thing that may impact you is the amount you get, because if your income substantially increased in 2020 it could lower or disqualify you from getting paid. But Congress has yet to release final details and I suspect they may allow you use 2019 or 2021 income. If you want to use your 2021 income you will have to wait till 2022 to claim these credits as a lump sump.

  2. Hello I am in California and I am still (pua) payments from December 27,2020-now. I have a $0 balance but the ending date (4/13/21). This is very frustrated and I have submitted all required documentation as request, still no call (it has been over 5 days since calling the last time). My claim was (rushed) but still nothing, they really need more staff. Don’t they have a COMPLIANCE team/dept, I know about claims and processing (I worked for Sutter as: Data entry,Claims 1,2&3 specialist and research specialist, on to auditing/compliance dept.

    I have worked most of my life and I did not think I would be ignored like this, when there is a great need

  3. I wish they go by 2020 tax year because my child turns 18 this year. Although, he will still need full financial support as he will be a full time student in college. I just hope we get to take advantage of that credit too.

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