Child Tax Credit 2021 guide: Eligibility, dates, calculators and everything you need to know

With the third stimulus checks well underway, let's turn our attention to another aid that provides significant assistance to families with dependent children. The child tax credit was also part of the COVID-19 relief plan which indicated that the new credit would go to qualified parents and caregivers so, let's find out who is eligible, when you can expect a payment and how much.

New Child Tax Credit

The new child tax credit will range anywhere between 500 dollars to 3,600 dollars per child, depending on their age. Similarly to the third stimulus payments, the child tax credit can be claimed when filing for taxes, however one big difference is that the tax credit will offer monthly payments as well. The split payment, albeit helpful, can make these payments slightly complicated especially if there is more than one child involved. The IRS commissioner Charles Rettig announced that the payments will begin "in July and will launch with payments going out on a monthly basis".

Stimulus Child Tax Credit: Who is eligible?

As with the stimulus checks, your annual household income quantity will be one of the determining factors for your eligibility to receive the new child tax credit and the amount you could receive. If your adjusted gross income (AGI) for 2020 is more than 75,000 dollars for single parents or 150,000 dollars for a married couple filing jointly (you will lose 50 dollars of credit per 1,000 dollars of income above the threshold, according to the WSJ).

The new child tax credit measure was ratified as part of President Biden's American Relief Plan in mid-March. It will provide a benefit of 3,600 dollars per child to parents with children age 5 and under through split payments, and it will be 3,000 dollars for each child between 6 and 17. Children who are 18 are not also considered dependents, as well as full-time dependent college students between the ages of 19-24, but they can qualify for a maximum of 500 dollars.

Requirements for eligibility according to the IRS website:

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• Both you and your child must be U.S citizens
• In cases of divorce, the child you are claiming the tax credit for must live with you for at least six months out of the year
• At least one of the parents must have a social security number or individual taxpayer identification number (ITIN)
• The child must also have a Social Security number-a child with only an ATIN won't qualify (this includes adopted children.)
• Parents who share custody of a child cannot both receive the tax credit.

When will it start?

The IRS commissioner Charles Rettig announced that the payments will begin in July:

"We will launch by July 1 with the absolute best product we are able to put together," Rettig said at a Senate Finance Committee hearing. "We are trying to get it as user-friendly as possible, but we will launch by July 1."

He went on to say that the federal agency will once again delay the portal for the new child tax credit if any technical issues arise that could lead to fraud and that the customer service was dealing with 1,500 calls per second.

When the tax credit was passed back in March, it was unclear whether or not there would be monthly payments, however, as the IRS commissioner confirmed that this would be possible, this is what your payments will look like.

Families eligible for the child tax credit will receive six monthly payments in 2021, arriving from July through December. The second half of the total annual credit can be claimed when families file their 2021 tax returns in 2022.

How can you calculate the amount you will receive?

There are a number of calculators available that can assist you in determining how much you will receive from the IRS.

You can receive up to 3,600 dollars per child aged 5 and under, and 3,000 dollars for kids between the ages of 6 and 17.

You can get a 500 dollar total payment for dependents who are 18 and for full-time college students between 19 and 24 years old.

If your income is higher than 75,000 dollars as a single filer and above 112,500 dollars as a joint filer, your child tax credit payments will begin to phase out by 50 dollars for every 1,000 dollars of income over the threshold.

tax credit calculator on CNET

The IRS has provided a questionnaire that will help you determine your eligibility, and you can find a tax credit calculator on CNET that will help you determine how much you will be receiving.