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The American Rescue Plan Act (Act) made key changes to the Child Tax Credit (CTC) for taxpayers. Credit amounts increased, the credit is fully refundable, and now includes children who turned 17 in 2021. Also, as a result of the Act, starting July 15, the IRS will start making advance monthly payments totaling half of the estimated CTC to taxpayers. The other half of the CTC will be taken on the taxpayers’ 2021 Forms 1040.
The annual maximum CTC is $3,600 per qualifying child under the age of 6, and $3,000 per qualifying child ages 6 – 17. To qualify, the child must live with the taxpayer in the United States for more than half of the year.
The maximum credit is available to taxpayers with a modified AGI of:

  • $75,000 or less for single taxpayers
  • $112,500 or less for head of household
  • $150,000 or less for married couples filing jointly and qualifying widowers
  • If a taxpayer’s AGI exceeds the applicable threshold above, the credit will start to be phased down

If you have children, you likely received or will soon be receiving a letter in the mail stating that you may be eligible to receive advance payments of the CTC. If you want to receive these payments, no action is required! If you do not want to receive these advance payments and prefer to utilize the full credit on your 2021 Form 1040, instructions on how to unenroll from the program will be issued at the end of this month. Please click on the link below for more details.

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