The advance child tax credit payments ended in December, but there’s still more money coming to eligible families in 2022. Now that tax season has arrived, the final enhanced child tax credit payment for 2021 — including any money you didn’t receive in advance — will arrive with your tax refund. Families who received the advance child tax credit in 2021 (the money went out from July through December) must reconcile what they received last year with what their financial situation is this year, and file a Schedule 8812.
To help taxpayers reconcile and receive 2021 CTC, the IRS is sending Letter 6419, Advance Child Tax Credit Reconciliation. A married couple filing a joint return will receive two letters. Taxpayers should keep this, and any other IRS letters about advance CTC payments, with their tax records.
Families who received advance payments must:
• File a 2021 tax return
• Compare the advance payments received in 2021 with the CTC amount they can claim for 2021
This letter contains helpful information for preparing tax returns. Taxpayers who received advance payments can also check amounts using the CTC Update Portal and Online Account on IRS.gov.
Eligible families who didn’t receive advance child tax credit payments can claim the full amount of the child tax credit on their 2021 federal tax return. This includes families who don’t normally need to file a tax return.
For more detailed information please read the FAQs below:
Q: What is the 2021 Child Tax Credit?
A: The Child Tax Credit is a fully refundable tax credit for families with qualifying children. The American Rescue Plan expanded the Child Tax Credit for 2021 to get more help to more families. The credit increased from $2,000 per child in 2020 to $3,600 in 2021 for each child under age 6. Similarly, for each child age 6 to 16, it’s increased from $2,000 to $3,000. It also provides the $3,000 credit for 17-year-olds. Under the American Rescue Plan, the IRS disbursed half of the 2021 Child Tax Credit in monthly payments during the second half of 2021.
The advance Child Tax Credit payments disbursed by the IRS from July through December of 2021 were early payments from the IRS of 50 percent of the amount of the Child Tax Credit that the IRS estimated you may properly claim on your 2021 tax return during the 2022 tax filing season.
Important: You don’t need to have income or a permanent address to claim this tax credit if you’re eligible.
Q: What is the amount of the Child Tax Credit for 2021?
A: For tax year 2021, the Child Tax Credit is increased from $2,000 per qualifying child to:
- $3,600 for each qualifying child who has not reached age 6 by the end of 2021, or
- $3,000 for each qualifying child age 6 through 17 at the end of 2021.
Note: The $500 nonrefundable Credit for Other Dependents amount has not changed. For more information about the Credit for Other Dependents, see the Instructions for Schedule 8812 (Form 1040).
Q: How much of the Child Tax Credit can I claim on my 2021 tax return?
A: This amount will depend on the following factors:
- You received advance Child Tax Credit payments for a qualifying child. You may have received a portion of your Child Tax Credit through advance Child Tax Credit payments during 2021. Generally, the total amount of advance payments for each of your qualifying children equaled 50 percent of the amount of the credit that the IRS estimated you would be eligible to claim on your 2021 tax return for those children.
- You didn’t receive advance Child Tax Credit payments for a qualifying child. If you didn’t receive one or more monthly advance Child Tax Credit payments in 2021 for a qualifying child, you can still receive those payments – and the remaining amount of your credit – by claiming the Child Tax Credit for that child when you file a 2021 tax return during the 2022 tax filing season. This includes families who don’t normally need to file a return.
- Your family experienced life changes during 2021. Changes throughout 2021, such as a change in filing status, change in the number of your qualifying children, or a change in your income could increase or decrease the amount of Child Tax Credit you are eligible to claim on your 2021 tax return. Families who received advance Child Tax Credit payments will need to compare the advance Child Tax Credit payments that they received in 2021 with the amount of the Child Tax Credit that they can properly claim on their 2021 tax return.
Q: How did the IRS determine the amount of my advance Child Tax Credit payments?
A: The IRS determined your advance Child Tax Credit payment amounts by estimating the amount of the Child Tax Credit that you may properly claim on your 2021 tax return filed during the 2022 tax filing season. The estimate was based on information shown on your processed 2020 tax return (including information you entered in the Child Tax Credit Non-filer Sign-up Tool in 2021). If the IRS hadn’t processed your 2020 tax return when they determined the amount of your advance Child Tax Credit payment for any month, they estimated the amount of your 2021 Child Tax Credit based on information shown on your 2019 tax return (including information you entered in the Non-Filer Tool on IRS.gov in 2020). Generally, once the IRS processed your 2020 return, they recalculated your advance Child Tax Credit payments and adjusted any remaining monthly payments. You may claim the remaining amount of your 2021 Child Tax Credit when you file your 2021 tax return during the 2022 tax filing season.
Q: Will the amount of my Child Tax Credit be reduced if my 2021 income is too high?
A: Yes, if your 2021 income is high enough, the amount of Child Tax Credit you can claim will be reduced. The amount of your Child Tax Credit will not be reduced if your 2021 modified adjusted gross income (AGI) is at or below:
- $150,000 if you are married and filing a joint return, or if you are filing as a qualifying widow or widower;
- $112,500 if you are filing as a head of household; or
- $75,000 if you are a single filer or are married and filing a separate return.
Q: How does my 2021 modified adjusted gross income (AGI) reduce the amount of my Child Tax Credit?
A: The Child Tax Credit is reduced (“phased out”) in two different steps, which are based on your modified adjusted gross income (AGI) in 2021.
The first phaseout can reduce the Child Tax Credit down to $2,000 per child.
- That is, the first phaseout step can reduce only the $1,600 increase for qualifying children age 5 and under, and the $1,000 increase for qualifying children age 6 through 17, at the end of 2021.
The second phaseout can reduce the remaining Child Tax Credit down to zero per child.
Q: How does the first phaseout reduce the 2021 Child Tax Credit to $2,000 per child?
A: The Child Tax Credit begins to be reduced to $2,000 per child if your modified adjusted gross income (AGI) in 2021 exceeds:
- $150,000 if you are married and filing a joint return, or if you are filing as a qualifying widow or widower;
- $112,500 if you are filing as head of household; or
- $75,000 if you are a single filer or are married and filing a separate return.
The first phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that applies to you.
Example: Your family has one 10-year-old qualifying child. The amount of income that reduces the $3,000 Child Tax Credit under the first phaseout depends on your family’s filing status. Specifically, the Child Tax Credit is reduced to $2,000 if modified AGI in 2021 exceeds:
- $169,000 if you are married and filing a joint return, or if you are filing as a qualifying widow or widower;
- $131,500 if you are filing as head of household; or
- $94,000 if you are a single filer or are married and filing a separate return.
Q: How does the second phaseout reduce the Child Tax Credit amount remaining after the first phaseout?
A: The second phaseout won’t begin to reduce the remaining Child Tax Credit until your modified adjusted gross income (AGI) in 2021 exceeds:
- $400,000 if married and filing a joint return; or
- $200,000 for all other filing statuses.
The second phaseout reduces, down to zero, the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that applies to you.
Q: Is my Child Tax Credit refundable?
A: Yes, if you meet the main home requirement described below, your Child Tax Credit will be fully refundable even if you had no income during 2021.
Main Home Requirement: You — or your spouse, if you are married and filing a joint return — must have your main home in one of the 50 states or the District of Columbia for more than half of 2021.
Important Rules:
- Your main home can be any location where you regularly live.
- Your main home may be your house, apartment, mobile home, shelter, temporary lodging, or other location and doesn’t need to be the same physical location throughout the taxable year.
- You don’t need a permanent address.
- If you are temporarily away from your main home because of illness, education, business, vacation, or military service, you are generally treated as living in your main home.
Q: What does it mean to me if my Child Tax Credit is fully refundable?
A: It means that you do not need any income or need to owe any tax in 2021 to receive the full amount of the Child Tax Credit for which you are eligible.
Q: What does it mean to me if my Child Tax Credit is not fully refundable?
A: If you don’t meet the main home requirements outlined above, you may still qualify for a $3,000 or $3,600 Child Tax Credit for each qualifying child. However, the refundability of the credit is limited, similar to the 2020 Child Tax Credit and Additional Child Tax Credit. For more information, please discuss this with your tax preparer.
Q: Are advance Child Tax Credit payments taxable?
A: No. Advance Child Tax Credit payments are not taxable and will not be reported as income on your 2021 tax return. Advance Child Tax Credit payments are advance payments of your Child Tax Credit for tax year 2021.
Q: Will I need to repay the IRS any of the advance Child Tax Credit payments that I received during 2021?
A: Maybe. The total amount of advance Child Tax Credit payments that you received during 2021 was based on the IRS’s estimate of the amount of Child Tax Credit that you may properly claim on your 2021 tax return.
Important: If the total amount of your advance Child Tax Credit payments was greater than the Child Tax Credit amount that you may properly claim on your 2021 tax return, you may have to repay the excess amount on your 2021 tax return during the 2022 tax filing season – unless you qualify for repayment protection.
For example, if you received advance Child Tax Credit payments for two qualifying children properly claimed on your 2020 tax return, but you no longer have qualifying children in 2021, the advance Child Tax Credit payments that you received based on those children are added to your 2021 income tax unless you qualify for repayment protection. For more information regarding your eligibility for repayment protection, please discuss this with your tax preparer.
