The recently enacted American Rescue Plan includes an expanded refundable Child Tax Credit (CTC) for the 2021 tax year. Many taxpayers will receive part of their credit in 2021 before filing their 2021 tax return. This will take the form of a monthly payment of up to $300 per month for each child under age 6, and up to $250 per month for each child age 6 and above. These monthly payments will be made to approximately 39 million households, which covers about 88 percent of all children in the U.S.

The payments will be made automatically and are scheduled to begin on July 15 and continue through December. The payments will be made through direct deposit, paper check or debit cards.

For tax year 2021, families claiming the CTC will receive up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021. They will receive $3,600 per qualifying child under age 6 at the end of 2021. Under the prior law, the amount of the CTC was up to $2,000 per qualifying child under the age of 17 at the end of the year. The increased amounts are phased out for households with incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.

For additional information, please contact Gray, Gray & Gray at (781) 407-0300.