Child Tax Credit 2021: what is the maximum age of the children to request the payment?

The American Rescue Plan passed in March will be sending more help to families with children in 2021 through an enhanced Child Tax Credit with optional monthly payments set to begin 15 July.

The tax credit was expanded both in size and age with parents of children who turn 17 in 2021 now eligible to receive up to $3,000. If your child has their 18th birthday before the end of the year you’ll need to settle for a smaller tax credit.

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What is the maximum age of the children to request the 2021 Child Tax Credit payments?

The changes to the Child Tax Credit are currently just for the 2021 fiscal year, however President Biden wants to extend the credit until 2025. And if Democrats in Congress have their way, the credit would be made permanent in the American Families Plan.

Eligible families can receive up to $3,000 per child between the ages of 6 and 17 at the end of 2021. Each child under age 6 at the end of 2021 could qualify for up to $3,600. The credit is fully refundable so even if a family owes less than the amount of the credit, they will receive the excess as a tax refund. In the case of the revamped Child Tax Credit, parents will receive part of the credit in advance if they choose.

Under the American Rescue Plan taxpayers can claim up to $500 each toward the child tax credit for 18-year-old dependents and dependents between the age of 19 and 24 who are attending college full-time.

Who is eligible for the enhanced Child Tax Credit?

Under the new legislation, individuals will qualify for the full enhanced Child Tax Credit if their annual earnings are below $75,000; or a joint income of up to $150,000 for married couples, widows and widowers and $112,500 for heads of household. If your earnings are above those limits, you will receive a reduced credit which gradually phases out $50 for every $1,000 over the threshold.

The IRS will determine eligibility based on 2020 tax returns, or 2019 returns if a taxpayer’s 2020 tax return hasn’t been filed and processed yet. To be eligible a taxpayer must have their main home in the US for more than half the year. Other than filing a 2020 tax return there is no further action necessary to sign up for the program, the IRS will calculate a taxpayer’s eligibility.

The IRS urges taxpayers with children to file a 2020 tax return as soon as possible to get the correct amount from the tax credit. The agency also recommends using direct deposit to receive their refund and the advance payments faster.

Parents can choose to receive the credit as a lump sum or monthly payments

Families could receive a monthly payment of $300 per child under 6 and/or $250 per child under 18 at the end of the year. The IRS have confirmed that the payments will begin 15 July and be paid on the 15th of every month through December, “unless the 15th falls on a weekend or holiday, allowing families who receive the credit by direct deposit to plan their budgets around receipt of the benefit.”

The monthly payments will cover half the total credit and next year when taxpayers file they can claim the remainder of the credit on their tax return. However, if a family wishes they can opt out of the advance monthly payments and claim the whole credit as a lump sum when they file next year. Currently the IRS doesn’t have information available on this option but will post new information as it becomes available on the Advance Child Tax Credit Payments in 2021 website.