Advance Child Tax Credit Payments
The advance Child Tax Credit (CTC) payments will be making their way to the pockets of many taxpayers starting next month.
As you may recall, this advance payment was part of the American Rescue Plan signed into law in March which makes the CTC fully refundable and increases the child tax credit for most taxpayers. For 2021, 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 the age of 6. Half of the estimated CTC is set to be paid as an advance in monthly payments starting July 15th.
In preparation for these payments, the IRS is sending letters out with information about this advance payment as well as the steps to take to for non-filers as well as to opt out of the advance.
We strongly caution you with these advance payments if you rely on these credits to reduce your tax liability. These advance payments may put you in a position come tax time where you would owe money to the IRS rather than get a refund.