00:00:00 Intro
00:00:24 What are Direct Child Tax Credit Payments?
00:01:05 How to Qualify for Direct Child Tax Credit
00:01:25 How Much Is The Maximum Child Tax Credit?
00:01:55 A Sample Scenario of How It Works
00:02:56 Recap of the Direct Child Tax Credit Rules

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Starting in July, American parents will begin to receive around $300 each month per child as part of the Direct Child Tax Credit Payments.

What is the Child Tax Credit?

The Child Tax Credit (CTC) has been increased and expanded to include an option for most parents to receive a portion of the credit during 2021.

Not only has Congress improved the CTC, but it’s also made it more complicated! Oh well, at least it’s a “net gain,” as we say in accounting. Here’s a list of important details:

1. For each child under age 6 (as of December 31, 2021), the maximum credit is $3,600. For other children who are under 17 at the end of this year, the maximum credit is $3,000.
2. The maximum amount of the credit phases out if you make more than $75,000 (Single), $112,500 (Head of Household), or $150,000 (Joint filer).
1. For each $1,000 above the threshold, your credit is reduced by $50.
2. If your income is so high that you do not qualify, you may still be eligible for the “old” $2,000 CTC, which is still in place. This credit phases out at $200,000 for most returns or $400,000 for Joint returns, and it’s also reduced by $50 for every $1,000 above the threshold.
3. There is no minimum income requirement for the 2021 CTC. This is a change from the past.
4. Regardless of your CTC amount, half of your CTC will be split into six equal installments to be paid every month from July to December. For example, if you have one 8 year old child and you qualify for the full credit, you will receive $300 per month from July through December, and then be eligible for an additional $1500 tax refund come tax time.
1. These payments should arrive on the 15th of each month, unless that day is on a federal holiday or weekend, in which case it will be the first federal business day after the 15th.
2. You can opt out of these advance payments if you like. The IRS will set up a web portal for this at a future time.
5. We’re told that you don’t have to file a tax return to be eligible for the CTC, and you can use this portal instead, but as of the writing of this article, the portal is closed. Regardless, we recommend filing your taxes even if you don’t have to, because if the IRS isn’t making you file taxes it’s probably because they owe you a refund!

You can read the full details of the Child Tax Credit over on our blog here: https://www.tldraccounting.com/direct...


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