The American Rescue Plan, signed in March 2021, made changes to the Child Tax Credit for 2021. For 2021, the credit amounts increase, are refundable, and include children who turn age 17 in 2021. Further, the American Rescue Plan directs the IRS to advance half of the estimated 2021 credit beginning in July.

Increased Credits:

  • $3,600 per qualifying child under age 6
  • $3,000 per qualifying child between ages 6 – 17

These increased credits are ONLY available to taxpayers with a modified Adjusted Gross Income of:

  • $75,000 or less for single taxpayers,
  • $112,500 or less for head of household,
  • $150,000 or less for married couples filing a joint return and qualifying widow(er)s and
  • the maximum credit phases out for higher income taxpayers.

Advance Payments:

The IRS will begin advancing one half of the estimated Child Tax Credit beginning July 15, 2021. Subsequent payments will be made on or around the 15th of each month through the rest of the year. The IRS has launched two online tools. The first allows taxpayers to unenroll. The second tool allows those who may be eligible for credits, but do not file a tax return the ability to enter information. In the future, taxpayers will have the ability to update their bank account, mailing address, family status and changes in income.

Advance Child Tax Credit Payments in 2021

What should I do?

If you ordinarily file a tax return, review your most recently filed tax return to determine if the estimate the IRS will be using makes sense. Consider any changes to income, filing status and children claimed that may impact your eligibility. Amounts received in advance will not be available when your 2021 tax return is filed, which may reduce or change your refund. If you receive advance payments that you are not entitled to, you will repay those upon filing your 2021 tax return. If you do not want to receive advance payments, you may unenroll online. If you file a joint tax return, both spouses will need to unenroll. To stop advance payments, you must unenroll 3 days before the first Thursday of the next month by 11:59 p.m. Eastern Time. If you are eligible and wish to receive payments, no action is required.

Please contact your local Kemper office if you have questions or need additional information.