At what age are children no longer eligible for the Child Tax Credit?

The first wave of monthly payments for the new Child Tax Credit covered an estimated 35 million American households but some older children may just miss out.

At what age are children no longer eligible for the Child Tax Credit?

The IRS is scheduled to make the next round of payments for the Child Tax Credit on 13 August, the second such payment since the new programme was introduced in July.

The overhauled Child Tax Credit will provide a monthly payment worth up to $300 per child for those aged younger than six; while children aged between six and 17 will be entitled to a maximum monthly payment of $250. Dependents aged 18 or over at the end of 2021 will not be eligible for any support from the programme.

Why is the eligibility based on a child’s age at the end of 2021?

When the Child Tax Credit was first introduced in 1997 it was simply a single, end-of-year tax credit which allowed families to reduce the size of their tax bill or increase the size of their tax refund. It was provided to eligible households at tax filing time each year and remained largely unchanged until this year.

When the American Rescue Plan was signed into law in March 2021 it brought about the first major overhaul of the Child Tax Credit with monthly payments provided for the first time. However as the programme is still a tax credit the payments being sent out on a monthly payments are really just an advance on the money which would have been available when families file their 2021 taxes next year.

As such, to be eligible for the monthly payments dependents have to qualify as a child at the end of 2021. If your child is 18 or older on 31 December 2021 then they will not be entitled to any of the payments distributed this year.

Should I opt out of the Child Tax Credit monthly payment?

If you would prefer to have the money in a single lump sum payment at the end of the tax year that is still an option, but the deadline to opt out of August’s payment has already passed. Many families have grown used to relying on the Child Tax Credit to reduce their tax bill come filing season so they may prefer to keep it.

You can opt out of the Child Tax Credit monthly payment by using the IRS’ new Child Tax Credit Update Portal and simply unenrolling from the advanced payments. This also eliminates the risk of having to pay back a proportion of the money received if you experience a considerable income increase before the end of year which means your household is no longer entitled to the payments.