For 2021 only the child tax credit has been increased from $2,000 per child to $3,000 per child from ages 6-17 and $3,600 per child for ages 5 and under.

The credit will also be partially sent out in advanced payments for the first time.

  • 50% of the credit will be advanced monthly from July-December 2021.
  • Advanced payments will be estimated based of 2020 tax returns or 2019 tax returns if 2020 has not been filed.
  • The increased amounts are phased out for incomes over $150,000 for married taxpayers filing a joint return and $75,000 for taxpayers filing single.
  • Income phase outs for the base $2,000 credit did not change from 2020, $400,000 filing joint and $200,000 filing single.
  • Babies born in 2021 will qualify for the credit and can be used to calculate the advance payments if parents update filing information in the IRS portal.

Planning Considerations

Some taxpayers who receive the child tax credit will have a reduced refund when filing their 2021 tax return.  The 2021 Child Tax Credit is fully refundable and will be paid even if the taxpayer has no taxable income. This change makes it worthwhile to file if you have children, but not taxable income in 2021.

  • Business owners showing a tax loss will still qualify for the credit.
  • If your income increases in 2021 outside of the income threshold advanced payments received will need to be paid back through the 2021 tax return. Taxpayers potentially in this situation should consider opting out of the advanced payments.
  • The IRS is required to send out notice by January 31, 2022 showing the amount of payment made to you during 2021. Keep this document for tax return preparation.

Can I decline advance payments?

Enrollment into advanced payments is automatic if you qualified on your 2019 or 2020 income tax return, whichever is the last filed.

You should consider unenrolling if you believe that you would not qualify for advanced payments based on your 2021 income tax return. The phaseout of the additional child tax credit (amount over $2,000 per child) begins at $150,000 Adjusted Gross Income for Joint returns and $75,000 for Single.

The IRS gave a short window for taxpayers to unenroll for July’s payment with the due date to unenroll of June 28, 2021. You can unenroll for August and subsequent payments until August 2, 2021.

If you file a joint return with your spouse, both you and your spouse must both unenroll from advance payments. In addition, you will need to verify your identity with the IRS or use an existing IRS username/password to complete this process.

Additional information available at and click on ‘Get Answers on the Advance Child Tax Credit.”