The IRS announced on Tuesday that it has updated its 2021 Child Tax Credit (CTC) and Advance Child Tax Credit Frequently Asked Questions. The IRS added another question — No. 17 to Topic A: General Information — and a revised section of questions — No. 2-6 to Topic F: Updating Your Child Tax Credit Information During 2021.
The information in these sections will help taxpayers claiming the Advance CTC and their tax professionals report 2021 income to the IRS. The IRS urges taxpayers to do so if their income for 2021 will differ dramatically from income claimed on their 2020 tax returns.
Taxpayers should make note that IRS advance CTC payments will not be automatically updated for 2021 if there were changes in income. Instead, the IRS provides an online portal, Child Tax Credit Update Portal (CTC UP), to report these changes. You should report changes if your income for 2021 was above the thresholds listed and was below the thresholds in 2020, or if your income was below the thresholds in 2021 but above those thresholds in 2020.
The IRS thresholds for modified adjusted gross income (AGI) to claim the advance CTC are currently:
- $75,000 for taxpayers who are single or married, filing separately
- $112,500 for those filing as head of household
- $150,000 for those married filing jointly or a qualifying widower
If your income exceeds those thresholds in 2021, but did not in 2020, your payments may be lowered. On the other hand, if your income falls below those thresholds for 2021 but was above it in 2020, you may be eligible for advance CTC. If you did not receive CTC payments in 2020 but are eligible based on your income, you can claim the full CTC amount as a fully refundable tax credit in your 2021 tax returns.
Likewise, if you did not receive any advance CTC payments for a child you will claim on your 2021 tax returns, you can claim the full amount of your allowable CTC on your 2021 tax returns.
If your filing status has changed and your income has increased past the threshold to qualify for the CTC, you cannot use the portal to update your income. You should, instead, consider unenrolling from the CTC through the portal, the IRS suggests.
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