Qualified families in South Carolina that claim the Child Tax Credit should look out for advance payments to come this summer. Here are some important updates about the Advance Child Tax Credit in 2021.
Beginning July 2021, and ending December 2021, the IRS will deposit monthly Advance Child Tax Credit payments to qualified families across the country. In total, households will receive half the amount of their Child Tax Credit in these payments. Families will be able to claim the other half of their credit when they file their 2021 tax returns.
How Will This Impact 2021 Tax Filing?
The Child Tax Credit is fully refundable for tax year 2021. Families can receive the entire amount that they are entitled. You can choose advance payments that should deposit directly to your bank account based on your previous 2020 tax return. You also have the option to decline Advance Child Tax Credit payments, but you will need to claim the credit when you file your 2021 tax return to receive your full amount.
If you normally do not file taxes but you still want to claim the credit, the IRS Non-Filer Sign-Up Tool is available HERE. NOTICE: This tool is for non-filers only.
Who Qualifies for the Advance Child Tax Credit?
According to the IRS, to qualify for Advance Child Tax Credit payments, you — and your spouse, if you filed a joint return — must have:
- Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return; or
- Given the IRS your information in 2020 to receive the Economic Impact Payment using the Non-Filers: Enter Payment Info Here tool; and
- A main home in the United States for more than half the year (the 50 states and the District of Columbia) or file a joint return with a spouse who has a main home in the United States for more than half the year; and
- A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number; and
- Made less than certain income limits.
What Should You Do Next?
Families do not need to take any extra action to receive their advance payments. The IRS will use information provided earlier to determine if you qualify for payments automatically.
Families should receive letters in the mail which state their household’s eligibility for the advance credit. Also, your family’s estimated monthly payment amount for tax year 2021 will be included in a mailed letter.
Other Useful Resources
The IRS is also offering a Child Tax Credit Update Portal. Through this portal families can update personal and banking information to ensure the IRS has their most accurate data. Also, you can opt-out of the advance payments using this IRS portal.
For more information on the Child Tax Credit available in multiple languages visit the IRS online HERE.
Financially Healthy Ways to Use Your Advance Child Tax Credit
You can use the advance payments in many ways to support your family’s immediate or future needs. With the advance payments consider paying down overdue utility bills, covering groceries, or buying school supplies and clothes. If these basic needs are already covered, consider planning for the future. You can begin paying off a high interest debt, credit cards or start a savings fund to reduce your future tax payments. Setting a savings goal of $1000 can be useful to cover emergencies. Check out our other blog Ways to Use Your Tax Refund While Recovering from the Pandemic for more tips on ways to spend your credit to support healthy finances.