 TITLE: New Child Tax Credits Under the 2021 Stimulus Plan CONTENT: Answers to Your Expanded Child Tax Credit Questions\n---------------------------------------------------\nMany of the details pertaining to when direct payments will begin and other specifics are still being worked out. As of publication, this is what we know so far.\n**How much per child is the tax credit?**  \nIn 2021, parents earning up to $400,000 jointly or $200,000 as single or head-of-household filers receive a child tax credit of $2,000 for every child 17 years old or younger. Parents who meet additional income guidelines (see below) also receive an enhanced child tax credit: Families with children 5 and under may receive up to an additional $1,600 for a total credit of $3,600. Families with children 6 to 17 are eligible for an additional $1,000, or $3,000 total.\n**What are the income guidelines?**  \nThe expanded child tax credits start to phase out at the following adjusted gross income levels: $75,000 for single taxpayers, $112,500 for head-of-household filers and $150,000 for joint returns. The credit is reduced by $50 for every $1,000 over these income thresholds.\nFamilies that do not meet these income guidelines may still qualify for the regular child tax credit of $2,000 per child if their incomes are below $400,000 for married couples filing jointly or $200,000 for single\/head-of-household taxpayers.\n**Are all children eligible?**\n*   Children must be U.S. citizens, national or resident aliens and have a Social Security number.\n*   They must be claimed as a dependent on your 2021 tax return.\n*   They must be related to you and live with you for at least six months during the year.\n**How will the IRS know whether or not you qualify?**  \nThe IRS will look at your most recent tax return for information on your income and dependent children to determine your eligibility to receive advance payments. If your information has changed since your last tax return, you'll have the opportunity to notify the IRS about the changes.\n**How do you receive the money?**  \nPer the ARPA, you will receive half of your total 2021 child tax credits as advance payments. If you're expecting a total credit of $9,000 for your three qualifying children, for example, you can anticipate $4,500 in advance payments, divided into installments. The plan is to send six monthly payments from July through December; so in our hypothetical example, each payment would be $750. The IRS plans to make most of these payments by direct deposit. You can then claim the remaining half of your tax credit when you file your 2021 return.\n**What if your information has changed since your last tax return?**  \nThe IRS is creating an online portal that will enable taxpayers to opt out of advance payments or submit new information that may affect their eligibility for credits, such as the birth of a child or a change in income. In the meantime, stay tuned to IRS announcements for more information.\n**What if you receive more in benefits than you're entitled to?**  \nYou will reconcile your advance payments when you file your 2021 taxes. If you receive more in benefits than you're entitled to claim, you may be required to repay that amount along with your taxes, although there may also be allowances for taxpayers to keep all or some of the money based on income. Bottom line: If you know you're being overcompensated, notify the IRS to avoid a bill at tax time.\n**Are these payments taxable?**  \nAdvance payments are a tax credit and are therefore not taxable, though you will need to indicate how much you were paid on your 2021 taxes. END