In this article we’ll share how to get up to $3,600 for each child you have through the 2021 Child Tax Credit. $3,600 is a big jump from the current child tax credit amount of $2,000 dollars so we want to make sure you have all the info you need to get this money. And, while you won’t be filing your 2021 taxes for a while, it’s especially important to cover this now because you could get a cash advance on these credits as soon as July of 2021.
To help you understand the 2021 child tax credit, were going to break this tax credit down into three main sections. First we’ll talk about who can get it, then we’ll talk about how much money you can get per child based on THEIR age and YOUR adjusted gross income, and finally we’ll cover how to get the payment and how you can get some of the money in your pocket as soon as July of this year.
Before we dive into all that though, it’s important to note two things. First, the 2021 child tax credit is FULLY REFUNDABLE. Second, there is no income floor. Previously the child tax credit was only partially refundable, meaning if you qualified for the 2,000 dollar credit and you didn’t owe anything in taxes, you would only get part of that $2,000 back as a refund. Now, it’s fully refundable so if the credit is more than the taxes you owe, you get the full difference as a cash refund. That means more money back in your pocket!
Additionally in previous years, to get this credit you had to have at least two thousand five hundred dollars of taxable income. Now, even if you have no taxable income, you can get the credit as a refund as long as you file your tax return.
So who is eligible? If you have a child under the age of 18, or a college student between the ages of 19 and 24, you’re eligible for a credit if you live in the US or one of its territories. There are some income limits, but the full child tax credit will be available to individuals who earn up to $75,000 and couples earning up to $150,000.
From there, the credit’s reduced by $50 for every additional $1,000 of adjusted gross income earned. The credit continues to reduce until you hit the tax credit value from previous years, of $2,000. So if you’re not eligible for the new, higher tax credit, because of your higher income, if you have income less than $400,000 as joint filers, or income less than $200,000 as individual filers, you get a $2,000 tax credit per child.
How Much Will You Get?
Alright, so let’s talk about how much money you’re going to get. Subject to the income limits we discussed, for every child you have under six years old, you’ll get up to $3,600. For every child between the ages of 6 and 17, you’ll get up to $3,000.
So, let’s say you’re married, file jointly, have an adjusted gross income of $115,000 and have a 2 year old, 4 year old, and 7 year old. You’ll get $3600 for the 2 and 4 year old, and $3,000 for the 7 year old. This means you’ll get a $10,200 dollar tax credit. If you don’t owe anything in taxes, that means over $10,000 back in your pocket.
Now let’s change up the situation a bit. Let’s say you’re still married and file jointly, but you have one child, a 12 year old, and you make $160,000. Now, a 12 year old means you’re eligible for up to $3,000 in a tax credit. But, the credit’s reduced by $50 for every additional $1,000 of income earned.
Let’s do the math together here, because if you’re anything like me, seeing the numbers helps a lot. At 160,000, you are $10,000 over the $150,000 limit. This means that you need to multiply 10 by 50 to learn that your credit will be reduced by 500 dollars. If you made $170,000, or $20,000 over the limit, you multiply 20 by 50, to see that your credit would be reduced by $1,000. This means that once you reach $170,000 dollars in income as a married couple that files jointly (with a 12 y/o), you’re back to the old child tax credit value of $2,000, and the higher 2021 tax credit has fully phased out.
How To Get this Credit Early
Millions of people qualify for the higher tax credit, and hopefully you’re one of them! So, how do you get it? Like most years, this benefit is tied to filing your taxes. But UNLIKE most years, you can get some of your child tax credit for 2021 as a cash advance. That means you don’t have to wait until next spring -- spring of 2022 -- to get your refund. It is likely that you’ll be able to start getting this credit as a monthly payment as early as July of this year -- 2021. For these early payouts, the IRS will use your 2020 taxes, so it is important to file your 2020 taxes, even if you didn’t make any money last year. If you need help getting started, check out this article on our three favorite tax filing resources.
Why This Matters
Filing your taxes when you have lower income can also make it possible for you to claim other tax credits, like the earned income tax credit, that we’ll cover in our next video. Now you know how to get up to $3,600 per child when you file your taxes, and how to start getting a payout as early as this summer.