Federal Child Tax Credit (CTC) Information
If you have a child (children) that is 17 years of age or younger in 2021 then you will receive a letter from the IRS with information about the Child Tax Credit (CTC). A copy of the letter is below. You could possibly be eligible to receive an advance payment of this credit. We will be encouraging our clients to “Opt Out” of this credit and if you do not opt out, you will automatically receive the advance payments. If you normally receive a refund when filing your tax return, it could put you in a situation in which you OWE taxes or owe more than usual. In addition, the CTC will be based on your 2021 tax return and if you receive advance payments based on your 2020 or 2019 tax return, you may have to pay back any excess payments received.
To opt out of the CTC, you can go to www.irs.gov/childtaxcredit2021 before July 15, 2021 and follow the instructions. Married filing jointly couples will each have to opt out of the credit. If you have any questions, please reach out to your CPA for more information.
Thank you for being a valued client,
Date: June 4, 2021
Contact number: 800-908-4184
Department of the Treasury Internal Revenue Service
Florence, KY 41042
You may be eligible to receive advance payments of the Child Tax Credit (CTC). If you’re eligible for advance CTC payments and want to receive these payments, you don’t need to take any action. You will receive a letter with more details.
The American Rescue Plan, signed into law in March, made important changes to the CTC for most taxpayers in 2021. The credit amounts increased for many taxpayers, and the credit is fully refundable, which means taxpayers can benefit from the credit even if they don’t owe any income taxes. The credit also includes qualifying children who turn age 17 in 2021. The American Rescue Plan directs the IRS to make advance monthly payments of half the estimated annual CTC. The IRS will make payments from July through the end of this year.
For tax year 2021, the advance CTC payments will be half of the estimated CTC. The maximum annual CTC will be $3,000 per qualifying child between the ages of 6 and 17, and $3,600 per qualifying child under age 6, at the end of 2021. In general, qualifying children must live with the taxpayer in the United States for more than half the year.
The maximum credit is available to taxpayers with a modified Adjusted Gross Income of:
- $75,000 or less for single taxpayers,
- $112,500 or less for head of household,
- $150,000 or less for married couples filing a joint return and qualifying widow(er)s and
- the maximum credit phases out for higher income taxpayers.
If you don’t wish to receive advance CTC payments, instructions on how to unenroll from these payments will be available by the end of June. Please continue to check www.irs.gov/childtaxcredit2021 for additional information about these advance CTC payments.
Letter 6416-A (en-sp) (5-2021)
Catalog Number 34528J