How Much Was the Advance Child Tax Credit?
Learn the financial mechanics of the Advance Child Tax Credit: how amounts were determined, paid out, and reconciled for taxes.
The advance Child Tax Credit payments were part of an initiative to provide financial relief to families. This program expanded the existing Child Tax Credit to offer increased support. The payments represented an early distribution of a tax credit that would otherwise be claimed when filing a tax return. This measure delivered funds to eligible families more immediately, ahead of the usual tax filing season.
Eligibility for Advance Payments
Families needed to meet criteria to qualify for the advance Child Tax Credit payments. A qualifying child had to be under age 18 by December 31 of the payment year and have a Social Security number. The child lived with the taxpayer for more than half of that year, and the taxpayer claimed the child on their tax return.
Eligibility extended to relationships such as the taxpayer’s own child, adopted child, stepchild, half-sibling, foster child, grandchild, niece, or nephew. The taxpayer needed a Social Security number or an Individual Taxpayer Identification Number and had a main home in the U.S. for over six months.
Adjusted Gross Income (AGI) determined eligibility for the full credit. For single filers, the full credit was available with AGI below $75,000. Head of household filers received the full amount with AGI under $112,500, while married couples filing jointly qualified with AGI under $150,000. Above these income thresholds, the credit amount began to phase out. The credit reduced by $50 for every $1,000 the AGI exceeded these limits.
Calculating the Advance Payment Amount
The advance Child Tax Credit provided increased financial support with maximum amounts per child based on their age. For a qualifying child under age 6, the maximum credit was $3,600. For children aged 6 through 17, the maximum credit was $3,000. These amounts increased from the prior $2,000 per child credit.
Credit amounts phased out for higher incomes. For married couples filing jointly, credit amounts reduced for AGIs above $150,000. For single filers, the phase-out began at $75,000, and for those filing as head of household, it started at $112,500. Beyond these initial thresholds, the credit was reduced by $50 for every $1,000 of AGI. A separate, higher income threshold also existed where the credit further reduced to its pre-expansion level.
Crucially, the advance payments typically represented half of the estimated total Child Tax Credit a family was eligible for. This portion was distributed in monthly installments from July through December of the relevant year. For example, a family eligible for the full $3,600 credit for a child under 6 would receive $1,800 in advance payments, distributed as $300 per month over six months. Similarly, for a child aged 6 to 17, the $3,000 credit translated to $1,500 in advance payments, paid as $250 per month over six months. The remaining half of the credit was then claimed when the taxpayer filed their federal income tax return.
How Advance Payments Were Received
Eligible families primarily received their advance Child Tax Credit payments through direct deposit. The Internal Revenue Service (IRS) generally used the bank account information on file from previous tax returns or stimulus payments. This method ensured efficient delivery of funds directly into recipients’ bank accounts.
For those without direct deposit information on file, payments were issued as paper checks mailed to the address the IRS had on record. The typical payment schedule involved monthly disbursements, which began in July of the relevant year and continued through December. Payments were generally sent around the 15th of each month.
An online portal, known as the Child Tax Credit Update Portal, was made available by the IRS. This portal allowed recipients to view their payment history, update their direct deposit information, or opt out of receiving future advance payments if they preferred to claim the full credit when filing their tax return. Families who signed up for payments later in the year received larger monthly amounts to compensate for any missed payments, ensuring they still received their full advance portion by year-end.
Reconciling Advance Payments on Your Tax Return
Reconciling the advance Child Tax Credit payments was a required step when filing the annual federal income tax return. Taxpayers needed to accurately report the total amount of advance payments they received. The IRS provided Letter 6419, which summarized the total advance Child Tax Credit payments disbursed to the taxpayer during the year. This letter was an important document for tax preparation.
The reported advance payments were then accounted for on Schedule 8812, “Child Tax Credit and Credit for Other Dependents,” which taxpayers filed along with their Form 1040, U.S. Individual Income Tax Return. This process compared the advance payments received against the actual Child Tax Credit amount the taxpayer was eligible for based on their complete tax year’s income and circumstances.
If a taxpayer received more in advance payments than they were ultimately eligible for, they might have had to repay the excess amount, which could result in a reduced refund or an increased tax liability. Conversely, if a taxpayer received less in advance payments than their final eligible credit, the remaining balance would either increase their tax refund or reduce the amount of tax they owed. The reconciliation process ensured that the correct total credit was applied to the taxpayer’s account for the tax year.
Calculating the Advance Payment Amount
Crucially, the advance payments typically represented half of the estimated total Child Tax Credit a family was eligible for. This portion was distributed in monthly installments from July through December of the relevant year. For example, a family eligible for the full $3,600 credit for a child under 6 would receive $1,800 in advance payments, distributed as $300 per month over six months. Similarly, for a child aged 6 to 17, the $3,000 credit translated to $1,500 in advance payments, paid as $250 per month over six months. The remaining half of the credit was then claimed when the taxpayer filed their federal income tax return.
How Advance Payments Were Received
Eligible families primarily received their advance Child Tax Credit payments through direct deposit. The Internal Revenue Service (IRS) generally used the bank account information on file from previous tax returns or stimulus payments. This method ensured efficient delivery of funds directly into recipients’ bank accounts.
For those without direct deposit information on file, payments were issued as paper checks mailed to the address the IRS had on record. The typical payment schedule involved monthly disbursements, which began in July of the relevant year and continued through December. Payments were generally sent around the 15th of each month.
An online portal, known as the Child Tax Credit Update Portal, was made available by the IRS. This portal allowed recipients to view their payment history, update their direct deposit information, or opt out of receiving future advance payments if they preferred to claim the full credit when filing their tax return. Families who signed up for payments later in the year received larger monthly amounts to compensate for any missed payments, ensuring they still received their full advance portion by year-end.
Reconciling Advance Payments on Your Tax Return
Reconciling the advance Child Tax Credit payments was a required step when filing the annual federal income tax return. Taxpayers needed to accurately report the total amount of advance payments they received. The IRS provided Letter 6419, which summarized the total advance Child Tax Credit payments disbursed to the taxpayer during the year. This letter was an important document for tax preparation.
The reported advance payments were then accounted for on Schedule 8812, “Child Tax Credit and Credit for Other Dependents,” which taxpayers filed along with their Form 1040, U.S. Individual Income Tax Return. This process compared the advance payments received against the actual Child Tax Credit amount the taxpayer was eligible for based on their complete tax year’s income and circumstances.
If a taxpayer received more in advance payments than they were ultimately eligible for, they might have had to repay the excess amount, which could result in a reduced refund or an increased tax liability. Conversely, if a taxpayer received less in advance payments than their final eligible credit, the remaining balance would either increase their tax refund or reduce the amount of tax they owed. The reconciliation process ensured that the correct total credit was applied to the taxpayer’s account for the tax year.