Under the American Rescue Plan Act (ARPA) of 2021, the child tax credit (CTC) was expanded to a fully refundable $3,000 per eligible child under 18 ($3,600 per child under 6). In addition, ARPA provided parents with advance child tax credit payments totaling 50% of the estimated amount of their 2021 child tax credit. The advance child tax credit payments were not based on or related to the $500 non-refundable credit for other dependents who do not qualify for the child tax credit.

For families who met the income threshold and other qualifications, the increased, fully refundable 2021 CTC provided an immediate benefit that is expected to reduce child poverty in the U.S. by 45%, according to the Center for Poverty and Social Policy at Columbia University. The question is: How do families go about obtaining and managing this tax credit including these advance payments?

The first payments of the 2021 advance child tax credit started appearing in parents’ bank accounts on July 15, 2021. Here’s what to do to check if your family is eligible, what you need to do to get them, and how much you are eligible to receive.

Find Out If You Are Eligible

First things first. Determine whether you are eligible to receive child tax credit and advance child tax credit payments in 2021. You are eligible if all of the following apply to you:

• You have a qualifying child defined as your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any one of these.
• You provide half of the qualifying child’s support.
• The qualifying child lives with you for more than half of 2021.
• The qualifying child does not turn 18 before Jan. 1, 2022.
• You claim the qualifying child as your dependent on your taxes.
• The qualifying child is a U.S. citizen, U.S. national, or U.S. resident alien.
• You or your spouse, if married filing a joint return, have a main home in one of the 50 states or the District of Columbia for more than half the year.

Use the IRS Advance Child Tax Credit Eligibility Assistant to determine if you are eligible for advance child tax credit payments.

Determine How Much You Are Eligible For

The amount you receive for your 2021 child tax credit is determined by your modified adjusted gross income (MAGI) and the amount, if any, by which it exceeds certain thresholds. The thresholds are:

• $150,000 if married and filing a joint return or if filing as a qualifying widow or widower
• $112,500 if filing as head of household
• $75,000 if you are a single filer or are married and filing a separate return

Provided your MAGI does not exceed the relevant threshold above, your 2021 tax year child tax credit for each qualifying child is:

• $3,600 for children ages 5 and under at the end of 2021
• $3,000 for children ages 6 through 17 at the end of 2021

The amounts above will be reduced by $50 for each $1,000 (or fraction thereof) that your MAGI exceeds the qualifying threshold above up to $400,000 if married and filing jointly or $200,000 for all other filing statuses.

The child tax credit won’t begin to be reduced below $2,000 per child until your MAGI in 2021 exceeds $400,000 if married and filing a joint return; or $200,000 for all other filing statuses.

Above these levels, your child tax credit decreases by $50 for each $1,000 (or fraction thereof) until it phases out entirely.

You May Not Need to Do Anything

If you were eligible to receive advance child tax credit payments based on your 2020 or 2019 tax returns, you should have gotten your six payments automatically. If you entered information in the IRS Non-Filer tool for Economic Impact Payments (EIPs) in 2020, that should also register you with the IRS and require no further action on your part.

If Necessary, File Your Taxes

If you haven’t filed your 2019 or 2020 tax return, and you are required to, you should do that right away. Provide information about your bank account so you can receive your payments by direct deposit.

Use the IRS Non-Filer Tool

If you haven’t filed and are not required to do so, use the IRS Non-Filer tool to file a simplified tax return that will allow you to register for advance child tax credit payments.

Advance Child Tax Credit Payment Schedule

When you are registered in the system, advance child tax credit payments should have been disbursed as follows:

Source: Internal Revenue Service

What to Do if You Are Missing Payments

If you were late applying or for some other reason did not get a July, August, September, October, or November payment, your December payment should have been the full advance amount (half of your total child tax credit for 2021). This means that instead of up to 6 payments, you received just one in December.

Alternatively, you can claim your full 2021 Child Tax Credit when you file your income tax return in 2022. You will be filing for half of your credit anyway and, if you didn’t receive your full advance payment, you can claim whatever is due to you in April.

How to Create an ID.me Account

When the IRS determines your eligibility, it will calculate your child tax credit amount and process your advance payments automatically. To be proactive and inform yourself about your status, you must have an ID.me account.

An ID.me account provides a way for you to access your IRS information; register if you are a non-filer; and manage banking information, eligibility, or opt out of monthly payments if you prefer to receive one payment next year.

To create an ID.me account, start at the Child Tax Credit Update Portal. From there:

• Click on the Manage Advance Payments button.
• Click on the button marked ID.me Create an account.
• Enter your email, create and confirm a password, accept the terms, and click on Create an ID.me account.
• Read about ID.me then click Continue.
• ID.me will ask you to confirm your email then give you the option to set up multifactor authentication (a good idea) for added security.
• You will be asked to upload a picture of your photo ID, then take and upload a selfie using your phone or computer camera.
• Next, you will enter your Social Security number, confirm additional information, then click Continue.
• ID.me will send you a text message confirming that you want to set up an account. Click Allow and continue on the ID.me page to send verification to the IRS.
• If for some reason ID.me is not able to verify you, it will give you the option to have a video call with a “Trusted Referee.”
• Otherwise, you can return to the Child Tax Credit Update Portal, log in, and manage your account.

The Build Back Better Act Child Tax Credit Extension

Concern about whether Child Tax Credit advance payments would continue in 2022 overshadowed Congress’ debates over passage of the Build Back Better Act (BBBA), which, among other things, extended the enhanced credit for at least another year. But the BBBA did not pass by the end of 2021 and so the advance payments and the increased sums ended with the December 2021 payment.

The Build Back Better Act would have made the credit’s increased availability to the poorest families permanent, a move that the Jain Family Institute says would cut child poverty in the U.S. by 19%. BBBA would also have kept the enhanced child tax credit for all but the wealthiest families alive for one more year.