Parents will see a significant increase in the child tax credit (CTC) this year, thanks to the passage of the American Rescue Plan Act (ARPA) of 2021. Here are answers to some of the most frequently asked questions, and what the IRS needs all parents–including divorced co-parents filing separately–to know:
How much is the 2021 CTC?
- Families claiming the child tax credit for tax year 2021 will receive up to $3,000 per child between the ages of 6 and 17
- Parents will receive $3,600 per child under age 6
- Children who turn 17 in 2021 are included
Who is eligible?
- Incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers
- $112,500 for heads of household
- $75,000 for all other taxpayers
What about divorced parents?
- Only one parent can claim the CTC per child
- The IRS will send payments to the parent who claimed the child as a dependent on the most recent tax return on file
How soon will parents receive it?
- Advance payments will begin going out monthly starting in July 2021 through December, rather than the end of the year
- Payments are based on the most recent tax return–the IRS urges parents to file returns for 2020 as soon as possible
What did the CTC look like before 2021?
- $2000 per qualifying child
- Children age 17 and over were not eligible
- Parents waited until the end of the year to receive the tax credit
Is the new CTC permanent?
As written in the American Rescue Plan Act of 2021, the increased child tax credit is for the year 2021 only. There have been calls to make the expanded amount permanent, however. We will keep you posted on developments.
Visit the IRS information page for other details about the advance child tax credit.
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With a combined 30 years in family law, the attorneys at Raza & Jones, LLC, will provide the legal guidance you need. For questions, or to schedule a confidential consultation, call 314-449-8830.