As part of the last stimulus package that was passed in January, there was a provision in the law that allowed for the prepayment of 50% of the child tax credit in advance instead of it being used when you file your taxes at the end of the year. The amount of the tax credit was increased from $2,000 per child to $3,600 for children under 6 years old and $3,000 for children 7-17 years old. While this does not apply to everyone, if you have received the child tax credit on your last tax return you will automatically be receiving either $300 (children under 6) or $250 (children 7-17) for each eligible child on the 15th of every month beginning on July 15, 2021. More details are available here.
This will have an effect on your 2021 tax return. If you are still unsure about how it will impact your tax return, please reach out to your tax preparer or wherever you filed your taxes and their tax professionals with be able to assist you further.
The chart below summarizes the difference between the 2020 and 2021 Child Tax Credit. The amounts listed are per child:
CHILDREN 6 AND UNDER
2020 CREDIT AMOUNT $2,000 2021 CREDIT AMOUNT $3,600
PREPAYMENTS $0 PREPAYMENTS $1,800
CREDIT REMAINING $2,000 CREDIT REMAINING $1,800
CHILDREN 7 -17
2020 CREDIT AMOUNT $2,000 2021 CREDIT AMOUNT $3,000
PREPAYMENTS $0 PREPAYMENTS $1,500
CREDIT REMAINING $2,000 CREDIT REMAINING $1,500
Mark Wittwer is CFO of Diamond Media Solutions