Is there a limit of children a family can claim for the $3,000 to $3,600 Child Tax Credit?

Families large and small that meet the income eligibility requirements will be able to claim the expanded Child Tax Credit in 2021 for each of their young ones. Each child under six at the end of the year could be eligible for up to $3,600, and those six through 17 at the end of 2021 could be eligible for up to $3,000.

The American Rescue Plan, President Biden’s first major legislative initiative as part of his Build Back Better program, included substantial changes to the Child Tax Credit. Among those changes, the age of qualifying children was raised to 17, the earnings floor was abolished and the whole of the credit was made refundable.

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2021 Child Tax Credit will be paid in advance

Removing the earnings floor and making the credit refundable meant that minus any taxes owed, every parent under the earning ceiling would be eligible to receive the full credit for every one of their children. This allowed another major change; the credit will be sent out in advance monthly installments instead of families waiting until they file a tax return next year. However, some families may want to consider whether they want to opt out of the monthly payments, especially if they may owe more in taxes in 2021.

The changes are only for the 2021 fiscal year, presently, so if a family doesn’t choose to unenroll from the program, they will receive six payments this year for half the credit each of their children are eligible for, regardless of how many children a parent has. Then they can claim the remainder due to them next year with their tax refund. But there are plans to extend the revamped credit beyond 2021, and if passed families could count on a monthly basic income year-round.

Eligibility requirements to receive the 2021 Child Tax Credit

Under the new legislation, individuals will qualify for the full value of the 2021 Child Tax Credit so long as 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 household earnings surpass these limits, a reduced credit will be distributed. For every additional $1000 in income, the credit's value will be gradually phased out $50.

To be eligible, a taxpayer must have their main home in the US for more than half the year and care for the dependent for at least half of the calendar year.

How to sign up for the 2021 Child Tax Credit

Anyone that filed a tax return in the past two years or has used the agency’s Non-Filer online tool is automatically registered. Parents can check if they are enrolled using the IRS Manage Payments online portal, which they can use to unenroll or change payment options as well.

The IRS determined how much each family would receive for the advance payments from July through December this year. The amount was calculated based on information the agency had processed by 28 June from either a 2019 or 2020 tax return. And for those not required to file a tax return, the amount is based on information provided to the IRS through the agency’s Non-Filer online tool either last year or by 28 June.

Those that have neither filed a tax return nor used the Non-Filer online tool are urged to do so to take advantage of the financial assistance.This includes those with no income who are eligible to receive the credit but are not normally required to file taxes. This includes those with no income who are eligible to receive the credit but are not normally required to file taxes.

They may want to file a tax return if they are eligible for other tax credits, filers who earn less than $72,000 a year are recommended to use IRS Free File online tools allowing their tax return to be processed faster. The agency also recommends using direct deposit to receive their refund and the advance payments faster.