2021 Child Tax Credit Calculator
How big will your child tax credit be on your 2021 tax return? How much will you get each month in advance payments? Our calculator will give you the answers.
Big changes were made to the 2021 child tax credit by the American Rescue Plan Act, which President Biden signed into law in March. The two most significant changes impact the credit amount and how parents receive the credit. First, the new law temporarily increases the credit amount from $2,000-per-child to $3,000-per-child ($3,600 for children 5 years old and younger) for the 2021 tax year. Second, it authorizes advance payments to eligible families from July to December. Half the total credit amount will be paid in advance with the monthly payments this year, while the other half will be claimed on the tax return you'll file next year. (Although these changes currently apply only to the 2021 tax year, President Biden wants to extend them beyond this year.)
However, not everyone will get the additional credit amount. And some families won't get any credit (or monthly payment) at all. That's because the credit is reduced – and possibly eliminated – for people with an income above a certain amount. In fact, there are two "phase-out" rules in play – one just for the extra $1,000 (or $1,600) amount and one for the remaining credit. That makes calculating the total credit and monthly payments very tricky.
But don't worry – we've got you covered. If you want to see how much money you'll get, simply answer the four questions in the calculator below and we'll give you a customized estimate of the amount you'll receive each month in advance from July to December and how much you'll be able to claim as a child tax credit on your 2021 tax return. It's that easy!
(Notes: (1) For Step 4, add any amount excluded from gross income on your tax return as foreign earned income; foreign housing expenses; or as income from sources within Puerto Rico, Guam, American Samoa or the Northern Mariana Islands. (2) Results are based on six payments from July to December. People who get their first monthly payment after July will still receive half their total credit for the year. As a result, the total payment will be spread over less than six months, making each monthly payment larger than the calculator's results.)
Pre-2021 Child Tax Credit Amount
For the 2020 tax year, the child tax credit was $2,000 per qualifying child. It was gradually phased-out (but not below zero) for joint filers with a modified adjusted gross income (AGI) of $400,000 or more and for other taxpayers with a modified AGI of $200,000 or more.
(For purposes of the child tax credit, modified AGI is the amount of adjusted gross income shown on Line 11 of your 2020 Form 1040 or Line 8b of your 2019 Form 1040, plus any amount excluded from gross income on your tax return as foreign earned income; foreign housing expenses; or as income from sources within Puerto Rico, Guam, American Samoa or the Northern Mariana Islands.)
New Phase-Out Scheme for 2021
For 2021, the increase (i.e., the extra $1,000 or $1,600) is gradually phased-out for joint filers with a modified AGI of $150,000 or more, head-of-household filers with a modified AGI of $112,500 or more, and all other taxpayers with a modified AGI of $75,000 or more. However, the increase can't be reduced below zero (other limitations to this reduction will apply as well).
After any reduction of the increased credit amount is calculated, the pre-existing phase-out is then applied to the remaining credit amount. So, for joint filers with a modified AGI of $400,000 or more and other taxpayers with a modified AGI of $200,000 or more, the credit is subject to an additional reduction – possibly to $0.
Monthly Payments in 2021
Once the credit amount is determined, 50% of it will be paid in advance with monthly payments. But those monthly payments will only run from July to December 2021. (The payments will be made on July 15, August 13, September 15, October 15, November 15 and December 15.) The remaining 50% will be claimed as a credit on your 2021 tax return.
The IRS is also building online tools that will let people update their income, marital status, and the number of qualifying children. Right now, you can go online and opt out of the monthly payments if you want to take the full child credit on your 2021 return instead. You can also make changes to the bank information used by the IRS to make direct deposit payments. Parents who aren't required to file a tax return can also go online to sign up for monthly payments.
If the IRS pays you too much in monthly payments (i.e., more than the child tax credit you're entitled to claim for 2021), you might have to pay back some of the money. Parents with 2021 modified AGI no greater than $40,000 (single filers), $50,000 (head-of-household filers), or$60,000 (joint filers) won't have to repay any child tax credit overpayments. However, families with a modified AGI from $40,000 to $80,000 (single filers), $50,000 to $100,000 (head-of-household filers), or $60,000 to $120,000 (joint filers) will need to repay a portion of any overpayment. Parents with modified AGIs above those amounts will have to pay back the entire overpayment. If you think you're being paid too much, you can opt-out of future payments.
For more information on this year's child tax credit and monthly payments, see Child Tax Credit 2021: How Much Will I Get? When Will Monthly Payments Arrive? And Other FAQs.
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