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2021 Child Tax Credit Calculator

The Kiplinger Washington Editors
·3 min read

The American Rescue Plan Act, which President Biden signed into law on March 11, temporarily increases the child tax credit from $2,000 to $3,000 per child ($3,600 for children 5 years old and younger) for the 2021 tax year. It also authorizes periodic "child allowance" payments to families from July to December. Half the total credit amount will be paid in advance with the periodic payments, while the other half will be claimed on the tax return that you'll file next year.

However, not everyone will get the additional credit amount. And some families won't get any credit (or periodic payment) at all. That's because the credit is reduced – and possibly eliminated – for people with an income above a certain amount. In fact, there are two "phase-out" rules in play – one just for the extra $1,000 (or $1,600) amount and one for the remaining credit. That makes calculating the total credit and periodic payments very tricky.

If you want to see how much money you'll get, answer the four questions in the calculator below and we'll give you a customized estimate of the amount you'll receive in advance from July to December (based on monthly payments) and how much you'll be able to claim as a child tax credit on your 2021 tax return.

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Pre-2021 Child Tax Credit Amount

For the 2020 tax year, the child tax credit is $2,000 per qualifying child. It's gradually phased-out (but not below zero) for joint filers with an adjusted gross income (AGI) of $400,000 or more and for other taxpayers with an AGI of $200,000 or more.

New Phase-Out Scheme for 2021

Under the American Rescue Plan, the 2021 increase (i.e., the extra $1,000 or $1,600) is gradually phased-out for joint filers with an AGI of $150,000 or more, head-of-household filers with an AGI of $112,500 or more, and all other taxpayers with an AGI of $75,000 or more. However, the increase can't be reduced below zero (other limitations to this reduction will apply as well).

After any reduction of the increased credit amount is calculated, the pre-existing phase-out is then applied to the remaining credit amount. So, for joint filers with an AGI of $400,000 or more and other taxpayers with an AGI of $200,000 or more, the credit is subject to an additional reduction – possibly to $0.

Periodic Payments in 2021

Once the credit amount is determined, 50% of it will be paid in advance with periodic payments. But those periodic payments will only run from July to December 2021. (The IRS said it's planning on monthly payments.) The remaining 50% will be claimed as a credit on the taxpayer's 2021 tax return.

The IRS will also create an online portal so that people can update their income, marital status, and the number of qualifying children. You can also use the portal to opt out of the periodic payments if you want to take the full child credit on your 2021 return instead.

For more information on the president's child tax credit plan, see Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs.

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