The American Rescue Plan Act made several changes to Child Tax Credit eligibility requirements and amounts. As a part of the Act, the IRS will pay eligible taxpayers half of their estimated 2021 Child Tax Credit in advance monthly payments beginning in July, 2021. The IRS has launched their Child Tax Credit Eligibility Assistant to help them determine if they are eligible to claim the Child Tax Credit on their 2021 federal tax return and receive the advance payments.
Using the Child Tax Credit Eligibility Assistant
In order to use the Tax Credit Eligibility Assistant, taxpayers will need to have a copy of their 2020 federal tax return (or their 2019 tax return if they have not yet filed for 2020). The assistant will ask the taxpayer to provide information on their Filing Status, number of qualifying children that they claimed, their total income and the amounts of any expenses or adjustments to income they had. The Eligibility Assistant will not ask for any personal information such as Social Security numbers, address or bank information.
Un-Enrolling from Advance Payments
Eligible taxpayers will be automatically enrolled to receive advance payments of the Child Tax Credit.
Taxpayers who would rather receive a lump sum Child Tax Credit on their 2021 tax return can use the IRS Child Tax Credit Update Portal to un-enroll or opt-out of receiving the advance payments. The Child Tax Credit Update Portal enables also allows taxpayers to quickly un-enroll or opt-out of advance payments if they do not qualify to receive them. Situations in which this may occur include:
- Their income in 2021 is too high to qualify them for the credit.
- Someone else (an ex-spouse or another family member, for example) qualifies to claim their child or children as dependents in 2021.
- Their main home was outside of the United States for more than half of 2021.