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What To Know About the Enhanced Child Tax Credit

Last summer, the federal government began sending out monthly advance payments to families that qualified for the enhanced child tax credit. The $1.9 million American Rescue Plan coronavirus relief package temporarily increased these payments to up to $3,600 annually, or $300 per month, for each child age 5 or under and up to $3,000 annually, or $250 per month, for each child between the age of 6 and 17.

The advance monthly payments stopped at the end of last year. However, there is an estimated $193 billion in tax credits still to be claimed by eligible families. The good news is that if you are eligible for these additional enhanced child tax credit payments, you can receive them this year.

Who is Eligible?

The full enhanced child tax credit is available to families whose 2021 adjusted gross income was at or below $150,000 (for married couples filing jointly) or $75,000 (for single filers). It phases out once AGI exceeds these levels and disappears once AGI reaches $440,000 (for married couples filing jointly) and $220,000 (for single filers).

On January 1, 2022, the child tax credit reverted to its previous amount of $2,000 for each child 17 years of age or younger for qualifying families. Instead of being sent out in advance, this credit will be claimed by eligible families when they file their 2022 tax returns next spring.

How to Receive Payments This Year

To receive the enhanced child tax credit payments this year, you must file a 2021 federal income tax return this spring. You will then receive the credit as part of your tax refund. Assuming you received the monthly advance payments between July and December of last year, you’ll receive up to $1,800 for each child age 5 or under and up to $1,500 for each child between the age of 6 and 17.

If you didn’t receive any enhanced child tax credit payments last year but are eligible, you can still claim the full amount of the credit as part of this year’s tax refund. The IRS started sending out letters (Letter 6419, 2021 Advance CTC) late last year letting taxpayers know how much they received and the number of qualifying dependents that was used to calculate the advance payments.

If you haven’t received this letter and are unsure about whether you received any enhanced child tax credit payments last year, you can visit Child Tax Credit Update Portal to find out. In fact, the IRS recommends that taxpayers visit this site to double-check that all the information is accurate.

How to Speed Up Your Payment

To receive enhanced child tax credit payments as quickly as possible, the IRS urges taxpayers to file their tax returns electronically and request direct deposit of their tax refund. According to the IRS, refunds can be issued via direct deposit in as little as eight days after electronic tax returns are filed. Refunds are issued between one and three weeks for returns filed electronically with direct deposit, compared to up to two months for paper returns mailed to the IRS that request refunds via a check.

If you have already filed your tax return, you can check on the status of your refund by visiting Where’s My Refund? If you have more questions about the enhanced child care tax credit, you can visit ChildTaxCredit.gov.

Be sure to consult a tax advisor for more details about your specific situation.

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