Parents of 2021 babies may qualify for up to $3,600 with the new child tax credit.
Sarah Tew/CNETThe expenses of a newborn can rack up quickly. And in a pandemic, the costs and stresses for parents can be even higher. On top of that, parents have to figure out what the new child tax credit rules mean for them. In the past, parents would claim their children on the prior year's tax returns and receive a $2,000 child tax credit as part of their refund. But things are different in 2021: The child tax credit check is now up to $3,600 for eligible children under age 6 and $3,000 for kids between ages 6 and 17.
Also, this year the IRS is sending advance monthly partial payments to qualifying families unless they opt out. It's great news for those who need the extra money now, but the requirements are especially confusing for babies born this year. New parents will have to do a little extra work to get their child tax credit payments, and they'll have to wait a bit longer, too. Because families won't be able to update the IRS about a new dependent until sometime in September, the first monthly payment for a new dependent wouldn't be earlier than Oct. 15.
We'll break down eligibility requirements and how to use the IRS web portals to manage your child tax credit payments. Read on to see how you'll soon be able to claim the credit for babies born or adopted in 2021, or any new dependents who weren't listed on your 2020 return. Plus, here's how to claim an additional credit for child care expenses and how to navigate through missing payments or other child tax credit problems. This story has been updated recently.
How can families with 2021 babies claim the credit?
If your dependents weren't reported to the IRS already (or haven't even been born yet), you have two options for receiving the child tax credit. First, you could always wait until you file your 2021 tax return next spring and receive the entire child tax credit in one lump sum, just like how the former version of the credit worked. For that option, you might have to unenroll in the advance payment program, since those monthly payments are automatic for eligible families. But if you'd like to receive some advance monthly payments before next year's tax season rolls around, there's a second option.
The Child Tax Credit Update Portal allows taxpayers to make sure their household information is correct, check payment status and unenroll from the monthly checks. Soon, the portal will let parents report any changes in status, such as number of dependents or income, from the latest tax return the IRS has on file (either 2020 or 2019). The IRS announced that in late summer or early fall, eligible families will be able to use the Update Portal to add more dependents, like babies born or adopted this year.
Eligibility is based on your child's age at the end of this calendar year. That means all qualifying children (there are other requirements we explain below) born on or before Dec. 31, 2021, will receive the full $3,600 tax credit over the course of 2021-2022. And parents of twins can get up to $7,200. The only variation will be in the timing and amount of each check.
Because the option to add a new dependent won't be made available by the IRS until later in September, parents will have already missed the July, August and September advance payments. However, if they add a new 2021 dependent in time for the October check, they can receive the remaining payments: October, November, December and, of course, the 2022 payment. Let's walk through a few examples below.
- Babies and children born or adopted before 2021: You don't have to do anything to receive child tax credit payments, assuming that the IRS has your 2020 or 2019 tax return on file. However, even if you don't usually file taxes, you could still qualify.
- Babies born or adopted between Jan. 1-July 31, 2021: If the child was somehow reported to the IRS before the first check was sent in July, checks will follow the usual timeline shown in the chart below. However, it's more likely that the IRS wasn't informed of this new dependent; in that case, the dependent will have to be added when that option is made available on the Update Portal in September.
- Babies born between July 1-Nov. 30, 2021: Because some payments have already gone out by the time you're able to register or update your information through the portal, you'll receive all subsequent monthly payments, with the remainder coming with your tax return next spring. The IRS has announced it'll also adjust the amount of each of your remaining monthly payments to account for having missed the first several payments.
- Babies born in December 2021: After the last check is sent, on Dec. 15, you'll no longer need to use the IRS portals to manage your household details and monthly payments. Instead, you'll receive the full amount when you file taxes in 2022 and claim your new dependent there.
- Babies born in 2022 and beyond: Unless the expanded child tax credit is extended, parents of 2022 babies will not be receiving monthly checks or the full 2021 amount of $3,600. That means a baby born on Dec. 31 is eligible, while a baby born Jan. 1, 2022 isn't. This is how the child tax credit has worked in the past as well.
What are the eligibility requirements for parents?
The 2021 child tax credit for newborns will be capped at $3,600 total per eligible child, going down from there as your income goes up. The IRS uses different adjusted gross income phaseout limits (when your income is too high to qualify for the full amount of the credit) for single filers, heads of household and married couples filing jointly.
CNET built a calculator for determining your specific payment eligibility, which you should definitely try out, especially if you also have older children, share custody or have concerns about your income. Remember that your child's age group is based on the age at the end of this calendar year, so keep that in mind for any dependent aging into the next payment bracket at any point in 2021. For example, if your 5-year-old turns 6 in October, you'll qualify for a smaller amount. As for other requirements, you and your child must be US citizens and your child needs a Social Security number.
You can also check to see if you qualify using the Eligibility Assistant tool. Then use the Child Tax Credit Update Portal to see if you're enrolled and to update your banking information or mailing address.
Watch this: Child tax credit: Everything we know
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When are the next child tax credit payments being sent?
The expanded child tax credit will be paid out in two distinct phases. Half your child tax credit total will come in advance, divided up in monthly checks, which started July 15 and will continue through December. The other half will be paid out on your 2021 tax return when you file in 2022. The next advance monthly payment will be disbursed on Sept. 15.
Child tax credit payment schedule
| Monthly | Maximum payment per child 5 and younger | Maximum payment per child; 6 to 17 |
|---|---|---|
| Jul 15: First 2021 check | $300 | $250 |
| 13-Aug | $300 | $250 |
| 15-Sep | $300 | $250 |
| 15-Oct | $300 | $250 |
| 15-Nov | $300 | $250 |
| Dec 15: Last 2021 check | $300 | $250 |
| Apr 2022: Second half of payment | $1,800 | $1,500 |
One option for parents with new dependents is to simply unenroll from the advance payment schedule entirely. If you opt out now, you'll receive the child tax credit money with next year's tax return. For more information about opting out through the Update Portal and all the unenrollment deadlines, see our story here.
We'll keep this story updated with new information. Still have unanswered questions? Here's what to know about 2021 income limits and frequently asked payment questions.
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