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Diamond Discussions: Prepayment of Child Tax Credit

Diamond Discussions: Prepayment of Child Tax Credit


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



Sources:                                           


https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021


https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-c-calculation-of-the-2021-child-tax-credit


https://www.cnbc.com/2021/06/21/repaying-2021-child-tax-credit-what-to-know.html


https://www.cnbc.com/2021/06/22/families-can-now-opt-out-of-child-tax-credit-payments-starting-july-15.html




Mark Wittwer is CFO of Diamond Media Solutions


Mark Wittwer
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