Child tax credit fast facts: Everything parents and guardians need to know

On July 15, many families in the U.S. started receiving the first monthly payment of the expanded child tax credit included in the American Rescue Plan, which was signed into law by President Joe Biden in March. 

According to the Internal Revenue Service (IRS) and the Treasury Department, eligible families will receive a “payment of up to $300 per month for each child under age 6 and up to $250 per month for each child aged 6 to 17." The payments, which will be sent by direct deposit or check, will continue to be made monthly on Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15. 

The VERIFY team answered several questions about this year’s Advance Child Tax Credit. Here’s what you need to know. 

THE QUESTION

For children born in 2021, are they eligible for the expanded child tax credit of $3,600?

THE SOURCES

• IRS
• The White House

THE ANSWER

Yes, eligible parents will be able to get a $3,600 child tax credit for children born in 2021.

WHAT WE FOUND

According to the IRS, the maximum child tax credit this year is $3,000 for dependents ages 6 to 17, and $3,600 for dependents 5 and younger. People who have babies in 2021 will be able to claim a child tax credit of up to $3,600 as long as they meet the other child tax credit requirements. 

The IRS is using tax return information from 2019 and 2020 to determine who is eligible for advance payments and will most likely be unaware if a family is newly eligible or eligible for an additional child tax credit due to a child being born in 2021. Nevertheless, the IRS says in late summer new parents will be able to add any new dependents using the Child Tax Credit Update Portal. Once the information has been updated, families should be able to receive monthly payments, WUSA reports.

Parents can also get their child tax credit through another option — a lump sum credit when they file their 2021 taxes, according to the White House. 

THE QUESTION 

Are parents of children who turn 18 before Jan. 1, 2022, eligible to receive the child tax credit for that child? 

THE SOURCES  

• IRS
• Mark Steber, senior vice president and chief tax information officer at Jackson Hewitt Tax Service

THE ANSWER 

 No, parents of children who turn 18 before Jan. 1, 2022, are not eligible to receive the child tax credit for that child.

WHAT WE FOUND

The IRS states on its website that in order to qualify for the advance child tax credit payments, families must have a qualifying child who does not turn 18 before Jan. 1, 2022. That dependent must also satisfy the following conditions.

Mark Steber, the senior vice president and chief tax information officer at Jackson Hewitt Tax Service, told VERIFY that the IRS generally adjusts the age of each dependent based on the prior year’s return, either 2020 or 2019, so a taxpayer shouldn’t automatically receive the advance payment for their 18-year-old. 

“Unfortunately, taxpayers who have a dependent who turns 18 in 2021 – at any point, from January 1 to December 31 – will not be eligible to claim the child tax credit,” said Steber. “If the IRS has made an error and sends payments to ineligible taxpayers, taxpayers should opt out of collecting the monthly advance payments. If ineligible taxpayers don’t opt out and still receive these payments, they may be required to pay back the IRS.” 

Steber also says the Other Dependents Credit of $500 is not part of the advance credit tax payments, “as it’s meant for a dependent like an elder parent that lives in your home.”

"Dependent children 18 and older, and all other dependents, are generally eligible for the $500 Credit for Other Dependents. This credit (Other Dependents Credit) is not part of the advanced child tax credit payments and must be claimed on the 2021 tax return when it is filed," according to Jackson Hewitt Tax Service.

THE QUESTION

Is there currently guidance for divorced parents claiming the child tax credit?

THE SOURCES

• IRS
• Erica D. York, economist for the Tax Foundation

THE ANSWER

No, there is not currently guidance for divorced parents claiming the child tax credit.

WHAT WE FOUND

An IRS spokesperson told VERIFY in June that the agency currently does not have guidance for divorced or separated parents in relation to the Advance Child Tax Credit. Instead, they shared a comprehensive list of frequently asked questions, including information that addresses reconciliation, as well as IRS Publication 504, which is a detailed publication on divorce and separation for taxes in general.

Erica D. York, an economist for the Tax Foundation, said that while there currently is no guidance from the IRS or the Treasury Department on how the child tax credit will be distributed to divorced or separated parents, the IRS will most likely use the most recent tax return on file to determine who qualifies for the advance payment. 

“Whatever parent claimed a child in 2020 would be the one to get the advance payment now. A dependent can only be claimed on one tax return. So in situations where parents alternate the years that they claim the credit, this could result in a parent receiving the credit two years in a row,” said York. “It may be a situation where it's best to opt out of the advance payments, so the parents can just wait to claim the credit on the tax return when they file taxes next year, and not have to deal with the complication of who's going to get the advanced payment and how will that be reconciled next year.”

There is an option to opt out of child tax credit payments, which can be found at the bottom of the IRS’s Child Tax Credit Update Portal. According to reports, families have until Aug. 2 to change their status and choose not to get the monthly payments for the remainder of 2021.

THE QUESTION

Can people who haven’t filed taxes get this year’s child tax credit?

THE SOURCES

• IRS
• Mark Steber, senior vice president and chief tax information officer at Jackson Hewitt Tax Service

THE ANSWER

Yes, people who have not filed taxes can get this year’s child tax credit.

WHAT WE FOUND

On June 14, the IRS announced it had set up the “Non-filer Sign-up tool” to help low-income families register for the advanced monthly child tax credit payments.

The Non-filer Sign-up tool is for people who did not file a 2019 or 2020 tax return and did not use the IRS non-filers tool last year to claim the two stimulus checks authorized by Congress.

Jackson Hewitt Tax Service chief tax information officer Mark Steber told VERIFY in June that there is no minimum income requirement to qualify for the child tax credit this year.

Steber also said that people who need to use the new Non-filer Sign-up tool may find out they’re eligible for additional money beyond the child tax credit. He said the tool can also be used to claim stimulus money that was passed by Congress in March 2021, as well as the recovery rebate for any stimulus money not received from the two payments approved in 2020 as part of COVID-19 relief.

THE QUESTION

Will the monthly child tax credit payments continue in 2022? 

THE SOURCES

• IRS
• The White House

THE ANSWER 

No, the monthly child tax credit payments will not continue in 2022 at this time, but President Joe Biden has proposed an extension in the American Families Plan.  

WHAT WE FOUND

According to the IRS, the American Rescue Plan expands the child tax credit for tax year 2021 only.

In April, President Joe Biden proposed extending the child tax credit in the American Families Plan through 2025. Several Democratic members of Congress have also called to make the child tax credit permanent.

“The American Families Plan will extend key tax cuts in the American Rescue Plan that benefit lower- and middle-income workers and families, including the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Tax Credit,” according to the White House. “In addition to making it easier for families to make ends meet, tax credits for working families have been shown to boost child academic and economic performance over time.”