The cost of raising a newborn can quickly add up, and during the pandemic, the financial and emotional strain on parents has been even greater. In addition, new parents must navigate changes to the child tax credit rules. Eligible children under the age of six may now receive a tax credit of up to $3,600, and for kids aged six to 17, the tax credit may be up to $3,000.
The IRS is now making monthly partial payments to qualifying families, which can be managed through their web portals. Parents of babies born in 2021 or any new dependents can receive these payments through two options: receiving the entire child tax credit in one lump sum by filing their 2021 tax return or receiving advance monthly payments through the Child Tax Credit Update Portal.
Eligibility is based on the child’s age at the end of the calendar year, and all qualifying children born on or before December 31, 2021, will receive the full tax credit. The option to add a new dependent will be made available by the IRS in September, allowing parents to receive the remaining payments from October to December 2022.
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 the 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 households, and married couples filing jointly.
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.
Child tax credit: Everything we know
When are the next child tax credit payments being sent?
The expanded child tax credit will be paid out in two distinct phases. Half of 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.
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.
The child tax credit has been expanded and revised to provide eligible families with financial assistance. Parents of newborns can receive up to $3,600 per eligible child through the child tax credit, with monthly payments being made by the IRS to qualifying families. The eligibility for the credit is based on the child’s age at the end of the calendar year, and parents of newborns have two options for receiving the credit – either as a lump sum through filing their 2021 tax return or as advance monthly payments through the Child Tax Credit Update Portal.
What is the child tax credit for newborns?
The 2021 child tax credit for newborns is a tax credit of up to $3,600 per eligible child, going down as income goes up.
How can families with 2021 babies claim the credit?
Families can either receive the entire child tax credit in one lump sum by filing their 2021 tax return, or through the Child Tax Credit Update Portal to receive monthly payments.
Who is eligible for the child tax credit?
Eligibility is based on the child’s age at the end of the calendar year. All qualifying children born on or before December 31, 2021, will receive the full tax credit.
How much money will parents receive from the child tax credit?
The amount of money parents will receive depends on their income and their child’s age, with up to $3,600 per eligible child.
Can parents still qualify for the child tax credit if they don’t usually file taxes?
Yes, even if you don’t usually file taxes, you could still qualify for the child tax credit.
Can parents of twins receive more money from the child tax credit?
Yes, parents of twins can get up to $7,200 from the child tax credit.
When will the option to add a new dependent be available?
The option to add a new dependent will be available in September, allowing parents to receive the remaining payments from October to December 2022.
What should parents do if their dependents were not reported to the IRS?
Parents can either wait until they file their 2021 tax return or receive some advance monthly payments through the Child Tax Credit Update Portal.
What happens if a baby is born in December 2021?
After the last check is sent in December 2021, parents will no longer need to use the IRS portals to manage their household details and monthly payments. They will receive the full amount when they file taxes in 2022 and claim their new dependent there.
Will parents of 2022 babies receive monthly checks or the full 2021 amount of $3,600?
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.