Here is what the expanded credit means, according to the Internal Revenue Service:
- The credit amounts will increase for many taxpayers.
- The credit for qualifying children is fully refundable, which means that taxpayers can benefit from the credit even if they don’t have earned income or don’t owe any income taxes.
- The credit will include children who turn age 17 in 2021.
- Taxpayers may receive part of their credit in 2021 before filing their 2021 tax return.
Families who claim the Child Tax Credit for 2021 will receive up to $3,000 per qualifying child aged 6 to 17 years old at the end of 2021. They will receive $3,600 per qualifying child under age 6 at the end of 2021.
Under the law before this one, the amount was up to $2,000 per qualifying child under the age of 17.
According to the IRS, the increased amounts are phased out for:
- incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers,
- $112,500 for heads of household,
- and $75,000 for all other taxpayers.
Advance payments of the Child Tax Credit will be made from July through December to those who qualify.
The IRS urges people with children to file their 2020 returns as soon as possible to make sure they’re eligible for the appropriate amount of the Child Tax Credit.