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Advance Child Tax Credit Payments: What You Need to Know

BROOKINGS, S.D. -  An advance payment of half of the expanded child tax credit (CTC) — the Advance Child Tax Credit — is now available through the American Rescue Plan, but Lorna Saboe-Wounded Head says some South Dakotans are asking: who is eligible and how do you sign up? 

"For most qualified taxpayers, the Advance Child Tax Credit is automatic," says Saboe-Wounded Head, South Dakota State University (SDSU) Extension Family Resource Management Field Specialist. "Income-eligible parents who filed tax returns in 2019 or 2020 will receive Advance Child Tax Credit payments automatically."

For others, the Internal Revenue Service (IRS) has a Child Tax Credit Non-filer Sign-up Tool on their website to report qualifying children born before 2021. This group includes low-income families who did not earn enough to have to file taxes.

The six scheduled payment dates for Advance Child Tax Credit benefits payable in 2021 are July 15, Aug. 15, Sept. 15, Oct. 15, Nov. 15 and Dec. 15. Most payments will be made via direct deposit.

Saboe-Wounded Head says the purpose of advance payments versus getting the expanded tax credit via an income tax return in 2020 is to get the money in the hands of eligible families sooner for coronavirus relief.

"Under current tax law, the 'regular' child tax credit is $2,000 per eligible child age 16 and younger and $1,400 is refundable (tax credit is larger than what people owe so they receive the difference as a refund)," Saboe-Wounded Head says. "For 2021 only, the expanded CTC increases to $3,000 per child ages 6 to 17 and $3,600 for children under the age of 6, and the credit is fully refundable. Advance Child Tax Credit payment amounts from July through December 2021 are $250 per month (children ages 6–17) and $300 per month (ages 5 and younger)."

Working families will receive a full expanded CTC if they earn an adjusted gross income (AGI) for the 2021 tax year up to $75,000 (single tax filers), $112,500 (head of household) and $150,000 (married couples filing jointly). Above those amounts, the expanded CTC decreases by $50 for every $1,000 that earnings are higher, phasing out completely at $20,000 over the limits. Parents who earn over the phase-out caps can still take the regular CTC if they earn up to $200,000 for singles and $400,000 married filing jointly.

The remainder of the credit is recorded on the 2021 tax returns due in 2022. There are proposals to extend the expanded CTC; however, as of now, it is only available in 2021.

For parents with questions, go to the IRS Child Tax Credit Update Portal. At this portal, users can view their eligibility and advance payments and unenroll from receiving advance payments. Unenrollment can be done three days before the first Thursday of the next month. A taxpayer only has to complete the unenrollment one time.  Saboe-Wounded Head says if they missed the one for the July payment, they can unenroll by Aug. 2 to not receive any more payments.