2021 Child Tax Credit calculator: Do you qualify for expanded monthly payments?

COLUMBUS, Ohio (WCMH) — The American Rescue Plan Act of 2021 has upped the child tax credit substantially — as high as $3,600 per child, ages 5 and under, for qualifying people.

People don’t need an income to get the credit, although they do need to file a tax return with their name, social security number and other vital details.

Child Tax Credit Payment Calculator

Use the calculator below to estimate how much you might receive in child tax credit periodic payments beginning in July, 2021.

How the child tax credit has changed

Mark Steber, the chief tax information officer at Jackson Hewitt Tax Service, said the law has changed considerably and taxpayers are eligible for a bigger credit.

“The Child Tax Credit has been around for decades and it’s a very popular tax credit for all types of payers, many tens of millions take advantage of it every year, and historically it’s been about $2,000 per child,” Steber told NewsNation affiliate WCMH.

“It’s a much bigger credit for potential taxpayers in tax year 2021, it’s as high as $3,600 per child ages 5 and under. And they raise the age on who qualifies: for ages 6 – 17 is now $3,000 again, up from $2,000.

“They even left in the architecture for the old credit, the $2,000. If you don’t qualify for the $3,600 or the $3,000, if your age or your income doesn’t allow you to qualify, you can still qualify for the $2,000 credit.”

Who qualifies for the expanded child tax credit?

Eligibility is determined based on Adjusted Gross Income (AGI), the amount of income reported after deductions are made.

Single filer — Phase-out begins at an AGI of above $75,000
Head of household — Phase-out begins at an AGI of $112,500
Couples filing jointly — Phase-out begins at an AGI of above $150,000
Child age 5 and younger — Max credit of $3,600 each
Child age 6-17 — Max credit of $3,000 each
Phase-out — The maximum value of the tax credit reduces by $50 for every $1,000 in income above the AGI limit.

Steber said the first pitfall for taxpayers is confusion. It’s difficult to sort out which credit you get, the dependency classification, custody and income level. Added to that is a new ability to give some taxpayers a portion of their credit — up to half, monthly, beginning in July — which they will reconcile on their next tax return.

“But in its simplest level, larger tax credit, millions of more people will qualify for a larger amount. They’ve also made it totally refundable, which is a dramatically big shift change from the old credit where you could offset your liability and then get up to about $1,400,” Steber explained.

But what if your income is low or zero? You should still file a tax return, and the IRS will cut a check or put the money into your account. This is a big change, and very different from years past. As Steber explains:

“If they have qualifying dependents aged 5 and under, they will put simply [that information] on their tax return after they fill out some of the questions, and the required information: name, Social Security number, typically relationship, and number of months in the home … You’ll qualify for up to $3,600 in refundable tax credit on your tax return [per qualifying child],” Steber said. “If you had zero income, low income, divorced, unemployed, laid off, injured, unable to work — you will get $3,600 per qualifying dependent… Now, as the law was written, if it was on the tax return in 2020, the current year tax return, and it looks like you probably will have the dependent next year, the IRS is going to advance half of those moneys to the taxpayers in the same venue that they got their refund this year, direct deposit or by check or through some account or some other means to get their tax refund.”

You don’t need a bank account for the IRS to put the money into. The IRS will send you a paper refund check, mailed to your house, if you’ve filed an income tax return with the correct information, Steber said.

And finally — there is no limit on the number of children. There is a limit on the amount of income that you can earn, $150,000, before you begin losing portions of the credit which phases out for higher-income earners, Steber said.