Families with children could see some big help soon. 

Sarah Tew/CNET

It’s been three weeks since President Joe Biden’s American Rescue Plan was signed into law. More than 130 million people received their third stimulus checks (find out how to track your payment) and unemployed workers have a $10,200 tax exemption to go along with the $300 weekly bonus payments. Families, however, continue to wait on word from the IRS on how they’ll receive the bigger child tax credit for 2021.

IRS Commissioner Charles Rettig said there could be delays on the expanded CTC during a House Ways and Means Committee hearing on March 18, The Washington Post reported. He explained the agency is bogged down with a backlog of tax returns and is working on guidance about the CTC. The IRS moved Tax Day from the traditional April 15 to May 17 to allow filers to make use of the benefits from the American Rescue Plan such as the CTC and unemployment insurance tax benefits.

Once the 2021 child tax credit is in full effect, it could reduce child poverty by 40%, according to a report from the Center on Budget and Policy Priorities for families that qualify for the dramatically increased payment and more regular checks. Here’s everything you need to know about the CTC, including eligibility rules for you and your kids, how much money you could get and whether the benefit will become permanent. (Here’s every way caregivers can benefit from a new bill.) This story has been updated.

What is the child tax credit and how does it work?

At a basic level, the CTC is a credit that parents and caregivers can claim to help reduce their tax bill, depending on the number and ages of their dependents. For many, it may provide a much-needed source of relief as part of a 2020 tax year refund

Previously, the CTC was a $2,000 credit parents could claim on their taxes for every child under the age of 17 (the same age range for child dependents that was used for the first and second stimulus checks). And if that credit exceeded the amount of taxes that a family actually owed, parents could still receive up to $1,400 of the balance as a refund; this is technically referred to as the additional child tax credit or refundable CTC. For example, a married couple with children ages 5, 10 and 12 would receive a total credit of $6,000 — unless they were due a refund, in which case they’d receive $4,200.

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What changed with the child tax credit for 2021? 

The American Rescue Plan will temporarily give more money to families. Here’s everything that changes:

  • Credits increase from $2,000 to $3,600 per child under 6 and $3,000 for children older than 6.
  • The credit would also be fully refundable.
  • Money from the credit will be split: Half will be paid through the tax refund and the other half will be paid monthly from July to December.
  • There is no $2,500 earnings floor.
  • Families in Puerto Rico can receive the credit.

Here are more details on money for qualified dependents, and who counts.

When will I receive the CTC money?

This part isn’t yet clear, with the IRS saying it’s still working on the details. We know that payments will occur “periodically,” but the IRS may not be able to commit to monthly disbursements. We also know that half the payment could come in 2022. Here are more details about when the CTC money will arrive, and how often.

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Am I eligible for the CTC?

Families with kids under 6 will receive up to $3,600 per child under the new COVID relief bill. Families with children aged 17 and under will receive a credit of $3,000 per child. Families with older kids are also eligible: You can claim $500 for each child aged 17 and 18, or for full-time college students between the ages of 19 and 24.

The tax credit applies to children who are considered related to you and reside with you for at least six months out of the year.

Note that though the eligibility requirements are relatively broad, higher-income families may receive a reduced credit. But married couples filing jointly with an adjusted gross income under $400,000 are eligible for the full amount, as are individuals with an AGI under $200,000. 

Under the new plan, the amount of the larger credit will start to phase out for single people earning more than $75,000 a year, heads of household earning more than $112,500 a year and married couples earning more than $150,000 a year. Here are more CTC eligibility details.


With the CTC for 2021, you could get more than one check this year.

Sarah Tew/CNET

Will the CTC be based on my 2019 or 2020 tax return?

It will likely depend. The IRS will be tasked with basing your eligibility for the CTC on your 2020 tax return, if that’s been processed by the first July payment. Otherwise — in the case of a tax return extension, for example — the agency would use your 2019 taxes to determine the amount you’re owed.

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How long will the new credit last? Is it permanent?

The CTC for 2021 is considered a temporary reprieve for the year and would last only through 2021. Any changes to a 2022 CTC would need to take place in a separate bill.

For more information, here’s everything in the 2020 stimulus bill, when the stimulus check could arrive and how to calculate how much money you’d get in a third check. Here is also how to track your payment and what we know about using direct deposit to receive your money.

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