The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
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The Expanded Child Tax Credit for 2021:
Frequently Asked Questions (FAQs)
Updated June 14, 2022
Congressional Research Service
https://crsreports.congress.gov
R46900
The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Contents
A. American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) Expansion of the Child Credit ........... 2
A1. How did the child credit work before the ARPA expansion? ....................................... 2
A2. How did ARPA change the child credit? ...................................................................... 3
A3. What features of the credit were unchanged by ARPA? .............................................. 5
A4: Can Americans living abroad receive the fully refundable child credit? ..................... 5
A5. Are servicemembers stationed overseas eligible for the ARPA-expanded child
credit? .............................................................................................................................. 6
A6: Can noncitizens receive the ARPA-expanded child credit? ......................................... 6
A7: Can unauthorized noncitizens (sometimes referred to as “undocumented
immigrants”) receive the ARPA-expanded child credit? ................................................. 7
A8. How long are the ARPA changes in effect? ................................................................. 7
A9. How much is the ARPA expansion of the child credit expected to cost (i.e.,
the budgetary impact)?..................................................................................................... 9
A10: How do taxpayers with children at different income levels benefit from the
ARPA-expanded child credit?........................................................................................ 10
B. Administration of the ARPA-Expanded Child Credit ................................................................ 11
B1. How was the ARPA-expanded child credit issued?..................................................... 11
B2. How were the monthly advance payments calculated? ............................................... 11
B3. Could taxpayers opt out of the advance payment program? ....................................... 11
B4. Were monthly payment amounts adjusted when the IRS received new
information? ................................................................................................................... 12
B5. Was there an income threshold above which advance payments were not
issued?............................................................................................................................ 14
B6. Did otherwise eligible households who, due to their low incomes, do not
normally file a tax return, automatically receive the advance payments? ..................... 14
B7. Were there any limitations on how the advance payments of the credit
could be spent? .............................................................................................................. 15
B8: How will taxpayers determine the amount of the credit they can claim on
their 2021 income tax return? ........................................................................................ 15
B9. Will taxpayers need to pay back excess amounts of the child credit? ........................ 15
B10. How does the “safe harbor” work?........................................................................... 16
B11. Could the advance payments of the credit and/or the credit claimed on 2021
income tax returns be reduced for child support or other debts? ................................... 16
B12. Does receipt of the credit—either in the form of advance payments or
claimed on a tax return—affect eligibility for other government programs? ................ 17
B13. Is the ARPA-expanded child credit—either in the form of advance payments
or claimed on a tax return—taxable? ............................................................................. 17
B14. Did Treasury update wage withholding schedules to reflect that up to half of
the credit was issued as advance payments before 2021 tax returns are filed?.............. 17
B15. How many advance payments of the 2021 credit were issued? ............................... 17
B16: How do low-income households that are not required to file a 2021 income
tax return claim the remainder of the child credit? ........................................................ 18
C. Territorial Residents and the Child Credit ................................................................................ 19
C1. Did territorial residents receive the child credit before ARPA? ................................. 19
C2. How did ARPA change the child credit for territorial residents in 2021? .................. 19
C3. Did territorial residents receive the advance payments of the 2021 credit? ............... 20
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
C4. How did ARPA change the child credit for territorial residents after 2021? .............. 20
Figures
Figure 1. Child Credit Amount by Income in 2021 Before and After ARPA .................................. 4
Tables
Table 1. Selected Parameters of the Child Tax Credit Under Current Law ..................................... 8
Table 2. Share of Taxpayers with Children Who Receive the Child Credit and Credit
Amount by Income Percentile in 2021, Before and After ARPA ............................................... 10
Table 3. Advanced Payments of the 2021 ARPA-Expanded Child Credit by Month .................... 18
Table A-1. Selected Research on the ARPA-Expanded Child Credit’s Impact on Poverty
and Economic Security............................................................................................................... 23
Table D-1. Steps for Reconciling Advance Payments of the Child Credit with the Actual
Credit on 2021 Income Tax Returns ........................................................................................... 43
Table E-1. Child Tax Credit for Residents of the Territories ......................................................... 46
Appendixes
Appendix A. Selected Research on the ARPA-Expanded Child Credit ........................................ 22
Appendix B. Congressional Resources ......................................................................................... 37
Appendix C. IRS and Treasury Resources on the ARPA-Expanded Child Credit for 2021 .......... 39
Appendix D. Steps to Reconcile Excess Advance Payments of the Child Credit Due to an
Incorrect Number of Qualifying Children .................................................................................. 43
Appendix E. The Child Credit and Residents of U.S. Territories.................................................. 46
Contacts
Author Information........................................................................................................................ 48
Congressional Research Service
The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
n March 2021, Congress passed legislation significantly expanding the child tax credit for one
year as part of the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2). ARPA expanded
the eligibility for and the amount of the credit for 2021, primarily for low- and middle-income
taxpayers. The law also directed the Treasury Secretary to establish a program to advance up to
half of the total credit amount before 2021 income taxes are filed. This is a departure from most
other tax benefits, which are typically delivered annually in a lump sum after federal income tax
returns are filed. These changes expired at the end of 2021 and are no longer in effect, although
some households may still be receiving some or all of the expanded credit with their 2021 income
tax return.
I
The 117th Congress is considering proposals to extend and/or modify the temporary child credit
expansion included in APRA. In April 2021, House Ways and Means Committee Chairman
Richard Neal released a discussion draft of the Building an Economy for Families Act that
included a provision to permanently extend the ARPA changes to the child credit.1 The Biden
Administration proposed making the full refundability provision included in ARPA permanent,
while extending other ARPA provisions through the end of 2025.2 At the end of September 2021,
the House Budget Committee reported the Build Back Better Act (BBBA; H.R. 5376), which
would have effectively extended the ARPA-expanded credit for four years through the end of
2025 and permanently made the credit fully refundable.3 On November 19, 2021, BBBA passed
the House of Representatives. Unlike the House Budget Committee version of the BBBA, the
House-passed version would have extended the 2021 expansion of the child credit for one year
(2022), while also making the credit fully refundable permanently beginning in 2023.4 On
December 11, 2021, the Senate Finance Committee released updated text of the tax provisions of
the BBBA. With respect to the child tax credit provisions, the updated Finance Committee text
is virtually identical to the House-passed BBBA.5
This report provides answers to selected frequently asked questions (FAQs) about the ARPAexpanded child credit for 2021. Additional resources may be found in the report’s appendices:
Appendix A: a selected compilation of research studies;
1 See House Committee on Ways and Means, “Chairman Neal Unveils Groundbreaking Proposal to Reshape the
American Economy,” press release, April 27, 2021, https://waysandmeans.house.gov/media-center/press-releases/
chairman-neal-unveils-groundbreaking-proposal-reshape-american-economy.
2 See U.S. Department of the Treasury, General Explanations of the Administration’s Fiscal Year 2022 Proposals, May
2021, https://home.treasury.gov/policy-issues/tax-policy/revenue-proposals; and CRS Insight IN11656, The Child Tax
Credit: How Would the Biden Administration’s Proposed American Families Plan Change the Child Tax Credit?
3 For more information, see CRS Report R46923, Tax Provisions in the “Build Back Better Act:” The House Ways and
Means Committee’s Legislative Recommendations, coordinated by Molly F. Sherlock; and CRS Insight IN11757, The
Child Tax Credit Under the House Ways and Means Committee “Build Back Better” Reconciliation Language:
Summary Table of Changes, by Margot L. Crandall-Hollick.
4 For more information on the child tax credit provisions in the House-passed BBBA, see CRS Insight IN11786, The
Child Tax Credit in the House-Passed Build Back Better Act: Summary Table, by Margot L. Crandall-Hollick.
Between when the House Budget Committee reported the bill in September and House passage in November, two
modified versions of the legislation were posted on the House Rules Committee website on October 28, 2021, and then
on November 3, 2021. For the October 28, 2021, modified version of the Build Back Better Act (BBBA; H.R. 5376)
see https://docs.house.gov/meetings/RU/RU00/20211028/114202/BILLS-117117-17ih.pdf. This legislative text
reflected the Biden Administration’s framework released earlier that day. The White House, “President Biden
Announces the Build Back Better Framework,” October 28, 2021, https://www.whitehouse.gov/briefing-room/
statements-releases/2021/10/28/president-biden-announces-the-build-back-better-framework/. For the November 3
modified text, see https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf.
5 For more information, see CRS Insight IN11827, The Child Tax Credit in the Senate Finance Committee Text of the
Build Back Better Act: Summary Table, by Margot L. Crandall-Hollick.
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Appendix B: a selected compilation of resources provided by Congress;
Appendix C: a selected compilation of resources provided by Treasury and the
Internal Revenue Service (IRS);
Appendix D: a detailed explanation of the safe harbor rules; and
Appendix E: a reference table on the child credit in the U.S. territories.
A. American Rescue Plan Act of 2021 (ARPA; P.L.
117-2) Expansion of the Child Credit
A1. How did the child credit work before the ARPA expansion?
Prior to ARPA, the child tax credit allowed eligible taxpayers to reduce their federal income tax
liability by up to $2,000 per qualifying child. For example, a family with three qualifying children
could reduce their income tax liability by up to $6,000. A qualifying child was generally any
dependent child under 17 years old. The credit was reduced in value, or phased out, by $50 for
every $1,000 of income over $200,000 ($400,000 for married couples who filed joint tax
returns).6
If a taxpayer’s income tax liability was less than the maximum value of the child tax credit, the
taxpayer was generally eligible to receive all or part of the difference as the refundable portion of
the credit. The refundable portion—the amount greater than income taxes owed—is referred to as
the additional child tax credit (ACTC) and was generally calculated using “the earned income
formula.”7 Under the earned income formula, if taxpayers had earned income above $2,500, the
ACTC gradually increased at a rate of 15% of earned income up to the maximum ACTC amount.
The maximum ACTC amount was $1,400 per qualifying child multiplied by the number of
qualifying children. Taxpayers with less than $2,500 of earned income were not eligible for the
refundable portion of the credit and, due to their low incomes, would generally be ineligible for
the nonrefundable portion of the credit as well. CRS estimates that about one in every five
taxpayers (19%) with a credit-eligible child had low incomes that resulted in them receiving less
than the maximum credit.8
After 2021, the ARPA expansion expired. The credit then reverted to the prior-law parameters
described above, including those parameters modified by P.L. 115-97, commonly referred to as
the Tax Cuts and Jobs Act or TCJA. The TCJA modifications are scheduled to expire at the end of
2025 (see Table 1).9
6 For the purposes of phasing out the child credit, income is defined as modified adjusted gross income (MAGI). Prior
to and after ARPA (P.L. 117-2), MAGI for the child credit equals adjusted gross income (AGI) increased by foreign
earned income of U.S. citizens abroad, including income earned in Guam, American Samoa, the Northern Mariana
Islands, and Puerto Rico. Hence, for most taxpayers, the income used to phase out their child credit is their AGI.
7 All families with three or more qualifying children could also calculate the ACTC using an alternative formula. The
alternative formula is the amount by which Social Security taxes paid exceed the earned income tax credit (EITC) up to
the maximum refundable credit. Taxpayers could claim whichever ACTC was larger—the ACTC calculated under the
earned income formula or under the alternative formula. But for most families who can calculate the ACTC under
either formula (i.e., families with three or more qualifying children), the ACTC under the earned income formula was
larger than the ACTC under the alternative formula.
8 See Figure 1 in CRS Report R46502, The Child Tax Credit: Selected Legislative Proposals in the 116th Congress.
9 For more information on the current-law parameters of the child credit after 2025, see CRS Report R41873, The Child
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Prior to ARPA, like other tax benefits, the child credit was received once a year after a taxpayer
filed their income tax return (i.e., as part of their income tax refund).
A2. How did ARPA change the child credit?
ARPA made three main changes to the child credit that affect the credit amount, especially for
eligible low- and moderate-income taxpayers. The law also temporarily changed how the credit
was delivered. These changes are temporary and in effect for one year—2021.
The three changes that affect the credit amount for 2021 are as follows:
Expanding eligibility to 17-year-olds: The law increased the maximum age for
an eligible child from 16 to 17.10
Making the credit fully refundable: The law eliminated the ACTC phase-in
based on earned income and eliminated the ACTC cap of $1,400 per child.11
Hence, the child credit for 2021 is “fully refundable” and the full value is
available to otherwise eligible taxpayers with no earned income (i.e., it is
available to taxpayers who do not work). Full refundability is generally only
available to taxpayers who live in the United States for at least half of 2021 (this
is sometimes referred to as the “principal place of abode requirement”).12
Increasing the maximum credit amount, with larger increases for younger
children: The law increased the maximum amount of the credit from $2,000 per
child to $3,600 per child for a young child (0-5 years old) and $3,000 per child
for an older child (6-17 years old).
Full refundability and the larger maximum credit will generally increase the credit amount for
low- and moderate-income taxpayers, as illustrated in Figure 1 (low- and moderate-income
taxpayers may also receive a larger credit as a result of expanding the eligibility age to include
17-year-olds). Higher-income families will generally receive the same benefit as under prior law
(although some with an eligible 17-year-old may also receive a larger credit).
Tax Credit: How It Works and Who Receives It.
10 The age of the child for a given year’s child credit is based on their age on December 31 of that year. In other words,
for the 2021 child credit, a child who is 17 years old on December 31, 2021, is considered 17 years old for the purposes
of the credit.
11 The law also eliminated the calculation of the ACTC under the alternative formula. See footnote 7.
12 Full refundability is also available to taxpayers who are bona fide residents of Puerto Rico for 2021.
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Figure 1. Child Credit Amount by Income in 2021 Before and After ARPA
Unmarried Taxpayer with One Young Child
Sources: CRS calculations based on Internal Revenue Code §24 and P.L. 117-2.
Notes: A stylized example assuming the taxpayer has one qualifying child and all income is earned income, with
no other sources of income and no above-the-line deductions claimed. Unmarried taxpayers with child creditqualifying children are assumed in this example to file as head of household. For more examples, see CRS Insight
IN11613, The Child Tax Credit: Temporary Expansion for 2021 Under the American Rescue Plan Act of 2021 (ARPA; P.L.
117-2).
This increase in the maximum child credit—an increase of $1,600 per young child and $1,000 per
older child—phases out by $50 for every $1,000 over specified thresholds until the credit amount
equals the current-law maximum of $2,000 per child, as illustrated in Figure 1. These thresholds
are $112,500 for head of household filers and $150,000 for married joint filers.13 The thresholds
are sometimes referred to as the “first thresholds” or “ARPA thresholds.” (The actual income
level at which the credit phases down to $2,000 per child depends on the number and age of
qualifying children.) For many families, the credit then plateaus at its prior-law level of $2,000
per child and phases out when income exceeds the current-law threshold of $200,000 ($400,000
for married joint filers).14 These thresholds are sometimes referred to as the “second thresholds”
13 This threshold also applies to surviving spouses as defined in IRC §2(a). In addition, taxpayers who file as married
filing separately or taxpayers who file as singles are subject to a $75,000 threshold. Single filers who can only claim a
child tax credit-qualifying child under IRC §152(e), but cannot claim that child under IRC §152(c) (and who have no
other dependents for tax purposes) generally may not file as a head of household.
14 The law states that up until a taxpayer’s income reaches $75,000 if single, $112,500 if head of household, and
$150,000 if married filing jointly, they will receive the maximum child tax credit amount. This amount is equal to
$3,600 multiplied by the number of qualifying children under six years old, plus $3,000 multiplied by the number of
qualifying children 6 to 17 years old. After this “first threshold” (i.e., the “ARPA threshold”), the credit amount begins
to phase down by $50 for each $1,000 over the threshold. The amount by which the credit phases down is limited to the
lesser of (a) the “applicable credit increase amount” (the difference between the ARPA credit and the prior-law credit
in 2021) or (b) 5% of the “applicable phaseout range” (the difference between the $200,000 and $400,000 phaseouts
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
or “TCJA thresholds.” (The name is in reference to the law—commonly referred to as the Tax
Cuts and Jobs Act [TCJA; P.L. 115-97] that established these thresholds.)
ARPA also temporarily changed the way the credit is delivered, advancing half of the total 2021
credit in six monthly payments between July and December 2021 (see “B. Administration of the
ARPA-Expanded Child Credit”). The remaining half of the credit can be claimed on 2021 income
tax returns filed in 2022.
A3. What features of the credit were unchanged by ARPA?
Aside from changing the credit amount for some taxpayers and advancing a portion of the credit
(see “A2. How did ARPA change the child credit?”), ARPA generally left other parameters of the
credit unchanged. Notably, these include the definition of a qualifying child and the taxpayer ID
requirements of a qualifying child. Specifically, a qualifying child must still meet various
requirements including being related to the taxpayer (the relationship test) and living with the
taxpayer for more than half the year (the residency test). In addition, through 2025, the taxpayer
must provide a qualifying child’s social security number (SSN) associated with work
authorization in order to receive the credit.15
A4: Can Americans living abroad receive the fully refundable child credit?
Generally, no, although if they owe enough in income taxes they may still benefit from other
aspects of the ARPA expansion. In order to receive the full amount of the ARPA-expanded credit
(and be eligible for the monthly advance payments of the credit in 2021), taxpayers must live in
the United States for more than half of 2021 (there is an exception for servicemembers, described
in “A5. Are servicemembers stationed overseas eligible for the ARPA-expanded child credit?”).16
Specifically, full refundability applies to taxpayers whose principal place of abode is the United
States for over half of 2021. Among married joint filers, only one spouse must fulfill this
principal place of abode requirement.17
Taxpayers who do not fulfill this requirement (i.e., “expats”) but are otherwise eligible to receive
the credit may generally calculate and claim the credit when they file their federal income tax
return. Insofar as these taxpayers can receive some or all of the credit in the form of the ACTC,
they will either calculate the ACTC under the earned income formula (or alternative formula) if
they do not claim the foreign earned income exclusion or be ineligible for the ACTC if they do
claim the foreign earned income exclusion.18 (These are the same rules as applied before ARPA.)
enacted under the TCJA and the $75,000, $112,500, and $150,000 phaseouts in ARPA). Notably, 5% of the applicable
phaseout range equals $6,250 if single, $4,375 if head of household, and $12,500 if a married joint filer. After the total
credit has been phased down by the lesser of (a) or (b), it then remains at its pre-ARPA level until it is phased out again
under the pre-ARPA threshold of $200,000 or $400,000 if married filing jointly (also referred to as the “TCJA
threshold”).
15 For more information, see “Definition of a Qualifying Child” in CRS Report R41873, The Child Tax Credit: How It
Works and Who Receives It.
16 Full refundability is also available to taxpayers who are bona fide residents of Puerto Rico for 2021. In the case of
the advance payments of the 2021 child credit, the IRS will determine if the taxpayer meets the principal place of abode
requirement for the reference year used to calculate the advance amount. In most cases the reference year is 2020, but if
a taxpayer has not filed a 2020 return, a 2019 return may be used.
17 The draft IRS Schedule 8812, Credits for Qualifying Children and Other Dependents, includes a question on line 13
asking if a taxpayer has a principal place of abode in the United States for more than half of 2021. See
https://www.irs.gov/pub/irs-dft/f1040s8—dft.pdf.
18 See IRC §24(d)(3). Under current law (IRC §911), U.S. citizens and resident aliens who live abroad are generally
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
For example, if an otherwise eligible taxpayer lived outside the United States in 2021 with two
qualifying young children, they could be eligible for up to $7,200 in the 2021 child tax credit, if
they had sufficient U.S. income tax liability. However, the maximum amount they could claim as
the ACTC would be either $2,800 if they did not claim the foreign earned income exclusion, or
$0 if they did.
A5. Are servicemembers stationed overseas eligible for the ARPA-expanded
child credit?
Generally, yes. The principal place of abode requirement for the ARPA-expanded credit is defined
by reference to Internal Revenue Code (IRC) Section 32(c)(4), including the special military rule:
the principal place of abode of a member of the Armed Forces of the United States shall be
treated as in the United States during any period during which such member is stationed
outside the United States while serving on extended active duty with the Armed Forces of
the United States. For purposes of the preceding sentence, the term “extended active duty”
means any period of active duty pursuant to a call or order to such duty for a period in
excess of 90 days or for an indefinite period.
A6: Can noncitizens receive the ARPA-expanded child credit?
Yes, in certain cases. Eligibility for the child credit is not explicitly based on a taxpayer’s
citizenship status or on their qualifying child’s citizenship status. However, other parameters of
the credit may indirectly limit some noncitizens’ ability to receive all or some of the ARPAexpanded credit. These parameters are briefly discussed below.
First, all taxpayers—citizens and noncitizens alike—must live in the United States for more than
half of 2021 in order to be eligible for the full refundability provision of the credit.19 (This is
sometimes referred to as the “principal place of abode” requirement for full refundability.)20
Second, under existing law, a qualifying child must be a U.S. citizen or U.S. national, and if not a
U.S. citizen or national, the child must be a resident of the United States.21 Finally, a taxpayer
must provide an SSN for each qualifying child in order to claim the benefit.22 This SSN must be
taxed on their worldwide income. In certain cases, these taxpayers may be eligible to exclude some or all of their
foreign earned income when calculating their U.S. federal income tax liability. In 2022, the maximum amount that can
be excluded is $112,000 per person.
19 Full refundability is also available to taxpayers who are bona fide residents of Puerto Rico for 2021. Otherwise
eligible taxpayers—citizens and noncitizens alike—who do not satisfy this “principal place of abode” requirement are
still eligible for the larger credit (up to $3,600 per young child and $3,000 per older child) and are still eligible to claim
the credit for 17-year-olds. Hence, in cases where (1) the principal place of abode requirement is not met; (2) the credit
amount exceeds their income tax liability; and (3) the taxpayer is claiming some or all of the credit in the form of the
ACTC, then the taxpayer will calculate the ACTC using earned income (they may also calculate under the alternative
formula if that yields a larger ACTC). In other words, their ACTC will be calculated as 15% of earned income over
$2,500 up to $1,400 child (adjusted for inflation).
20 Among married taxpayers who file a joint return, this “principal place of abode” requirement must be met by at least
one spouse. Taxpayers who participate in the credit’s advanced payment program also must fulfill this principal place
of abode requirement as documented on their 2020 income tax return (or if those data are not available, their 2019
income tax return).
21 See IRC §24(c)(2). Children are considered to be a resident of the United States if they pass the tests to be considered
a resident alien for tax purposes. For more information, see the answer to question 1 in CRS Report R43840, Federal
Income Taxes and Noncitizens: Frequently Asked Questions. In addition, whereas all U.S. citizens are considered U.S.
nationals, not all nationals are considered citizens. Noncitizen U.S. nationals include persons born in certain U.S.
territories, such as American Samoa.
22 According to a study by the Pew Research Center, “In 2016, 5.6 million children younger than 18 were living with
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associated with work authorization, meaning an SSN issued solely to receive a public benefit
does not qualify. These types of work-authorized SSNs are generally provided to all U.S. citizen
children and certain noncitizen children, including legal permanent residents (i.e., “green card
holders”), refugees, and asylees.23 Eligible taxpayers claiming the credit must provide either an
SSN or an individual taxpayer identification number (ITIN) to receive the credit. (Individuals
who are not eligible to receive an SSN are required to use an ITIN when filing their tax returns
and other documents with the IRS.24)
Hence, a noncitizen taxpayer who (1) lives in the United States for at least half of 2021; (2) has a
taxpayer ID (which can be either an SSN issued from the Social Security Administration or, if
ineligible for an SSN, an ITIN issued by the IRS); and (3) has a qualifying child with a workauthorized SSN who is either a U.S. citizen, national, or resident would generally be eligible for
the ARPA-expanded child credit.
A7: Can unauthorized noncitizens (sometimes referred to as “undocumented
immigrants”) receive the ARPA-expanded child credit?25
Yes, in certain cases. For the purposes of the child credit, a taxpayer’s eligibility to claim the
credit is not based on their immigration status. Instead, any noncitizen, irrespective of their
immigration status, may generally be able to claim the ARPA-expanded child credit if
1. their principal place of abode for more than half of 2021 is the United States;
2. the taxpayer has either an SSN, or if they are ineligible for an SSN, an ITIN;
3. the taxpayer’s child meets all eligibility requirements including that they are a
U.S. citizen, a U.S. national, or a resident of the United States; and
4. the taxpayer’s qualifying child has an SSN associated with work authorization.
Hence, there could be cases where a noncitizen taxpayer who is “undocumented” or who is not
authorized to work in the United States could be eligible for the ARPA-expanded child credit. For
example, an “undocumented” noncitizen living in the United States with a U.S. citizen child
could be eligible for the ARPA-expanded child credit.
A8. How long are the ARPA changes in effect?
The ARPA changes to the child credit were only in effect for 2021 and only affected the credit as
claimed on 2021 income tax returns. The ARPA changes to the credit were themselves layered
upon other changes in effect from 2018 through 2025, which were enacted by P.L. 115-97
(commonly referred to as the Tax Cuts and Jobs Act or TCJA). Hence, after 2021, the credit
unauthorized immigrant parents. Of these, 675,000 were unauthorized immigrants themselves.” It is unclear what share
of those 675,000 children do not have SSNs, nor is it clear how these figures have changed over time. Nonetheless, this
estimate may provide a sense of the number of children who cannot be claimed for the child credit under existing
taxpayer ID requirements. Jeffrey Passel and D'Vera Cohn, U.S. Unauthorized Immigrant Total Dips to Lowest Level in
a Decade, Pew Research Center, November 27, 2018, https://www.pewresearch.org/hispanic/2018/11/27/u-sunauthorized-immigrant-total-dips-to-lowest-level-in-a-decade/.
23 For more information, see Congressional Distribution Memorandum CD1321564, Noncitizen Eligibility for a WorkAuthorized Social Security Number (SSN).
24 For more information on individual taxpayer identification numbers (ITINs), see CRS Report R43840, Federal
Income Taxes and Noncitizens: Frequently Asked Questions.
25 Unauthorized noncitizens include those who have entered the United States without inspection or have overstayed
their period of lawful admission (overstays). For more information, see CRS In Focus IF11806, Citizenship and
Immigration Statuses of the U.S. Foreign-Born Population.
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reverted to prior-law TCJA parameters until 2025. After 2025, the credit would generally revert to
its pre-TCJA parameters under current law, as illustrated in Table 1.
Table 1. Selected Parameters of the Child Tax Credit Under Current Law
Parameter
Maximum
amount of
the credit
per childa
Pre-2018
permanent law
2018-2020
permanent law,
as amended by
the TCJA
2021
permanent law, as
amended by the
TCJA and ARPA
2022-2025
permanent law,
as amended by
the TCJA
Post-2025
permanent law
$1,000 per child
0-16 years old
$2,000 per child
0-16 years old
$2,000 per child
0-16 years old
$1,000 per child
0-16 years old
not adjusted for
inflation
not adjusted for
inflation
$3,600 per child 05 years old
$3,000 per child 617 years old
not adjusted for
inflation
not adjusted for
inflation
$1,400 per child
0-16 years old
$1,000 per child
0-16 years old
adjusted for
inflation: $1,500
in 2022 after
adjustment.
not adjusted for
inflation
not adjusted for
inflation
Maximum
ACTC per
childa b
Maximum
amount of the
refundable
portion of the
credit for lowincome
taxpayers
$1,000 per child
0-16 years old
$1,400 per child
0-16 years old
$3,600 per child 05 years old
$3,000 per child 617 years old
not adjusted for
inflation
adjusted for
inflation
ACTC
calculation
Phased-in
amount
calculated based
on earned
income formula:
15% of earned
income above
$3,000 not to
exceed the
maximum
ACTC.
Phased-in
amount
calculated based
on earned
income formula:
15% of earned
income above
$2,500 not to
exceed
maximum
ACTC.
Fully refundable:
The phased-in
credit for lowincome taxpayers
based on earned
income is
eliminated such
that low-income
taxpayers can
receive the
maximum credit
amount.
Phased-in
amount
calculated based
on earned
income formula:
15% of earned
income above
$2,500 not to
exceed
maximum
ACTC.
Phased-in
amount
calculated based
on earned
income formula:
15% of earned
income above
$3,000 not to
exceed the
maximum
ACTC.
Phaseout
Threshold
MFJ: married
filing jointly
HOH: head of
household
S: single
$110,000 MFJc
$75,000 HOH
$75,000 Sd
$400,000 MFJ
$200,000 HOH
$200,000 Se
$400,000 MFJ
$200,000 HOH
$200,000 Se
$110,000 MFJc
$75,000 HOH
$75,000 Sd
not adjusted for
inflation
not adjusted for
inflation
Initial Threshold:
Phaseout of
Increased Credit
$150,000 MFJf
$112,500 HOH
$75,000 Sg
not adjusted for
inflation
not adjusted for
inflation
not adjusted for
inflation
not adjusted for
inflation
Second
Threshold:
Phaseout of preARPA credit
$400,000 MFJ
$200,000 HOH
$200,000 Se
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Parameter
Pre-2018
permanent law
2018-2020
permanent law,
as amended by
the TCJA
2021
permanent law, as
amended by the
TCJA and ARPA
2022-2025
permanent law,
as amended by
the TCJA
Post-2025
permanent law
not adjusted for
inflation
Child ID
Requirements
Any taxpayer ID
(SSN / ITIN /
ATIN)
work-authorized
SSN
work-authorized
SSN
work-authorized
SSN
Any taxpayer ID
(SSN / ITIN /
ATIN)
Maximum
Child Age (at
the end of the
year)
16
16
17
16
16
Method of
Receipt
Claimed on tax
return
Claimed on tax
return
50% advanced;
remainder claimed
on tax return
Claimed on tax
return
Claimed on tax
return
Source: Internal Revenue Code, 26 U.S.C. §24. TCJA refers to P.L. 115-97, commonly referred to as the Tax
Cuts and Jobs Act. ARPA refers to P.L. 117-2, the American Rescue Plan Act of 2021.
a. The maximum credit amount per taxpayer is the maximum amount of the credit per child, multiplied by the
number of qualifying children. Similarly, the maximum ACTC per taxpayer is the maximum amount of the
ACTC per child, multiplied by the number of qualifying children.
b. The refundable portion of the child tax credit—the amount that can exceed what a taxpayer owes in
income taxes—is often referred to as the additional child tax credit or ACTC.
c. The threshold for married taxpayers who file separately is $55,000.
d. This includes taxpayers who file as surviving spouses.
e. This includes married taxpayers who file separately and taxpayers who file as surviving spouses.
f.
This includes taxpayers who file as surviving spouses.
g. This includes married taxpayers who file separately.
A9. How much is the ARPA expansion of the child credit expected to cost (i.e.,
the budgetary impact)?
The Joint Committee on Taxation (JCT) estimates that the total cost of the one-year ARPA
expansion is $105.1 billion, of which $84.4 billion is attributed to the refundable portion of the
credit (i.e., the ACTC).26 This is in addition to the existing cost of the program before ARPA.
26
The Joint Committee on Taxation estimates that the total cost of the one-year ARPA expansion of the child credit is
$109.5 billion between FY2021 and FY2031, of which $88.8 billion is attributed to the refundable portion of the credit.
These estimates, however, also include the cost of the permanent extension of the child credit to residents of the
territories. Unlike residents of Puerto Rico, who are to apply directly for the child credit with the IRS, other territorial
residents are to apply for and receive the child credit from their territorial tax authority. The Treasury is to provide
these territorial governments with funds to cover these payments. This permanent extension to the territories is
effective beginning in 2021 and so applies to the ARPA-expanded child credit. The budgetary cost of this permanent
extension is $4.4 billion between FY2023 and FY2031, all of which is attributable to the refundable portion of the child
credit. This amount is subtracted from the total cost to isolate the budgetary costs of the one-year expansion. See Joint
Committee on Taxation, Estimated Revenue Effects Of H.R. 1319, The “American Rescue Plan Act Of 2021,”
Scheduled For Consideration By The House Of Representatives On February 26, 2021, February 12, 2021, JCX-12-21,
https://www.jct.gov/publications/2021/jcx-12-21.
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Prior to the ARPA expansion, the total cost of the child credit was $117.7 billion, according to the
IRS’s most recent data from 2018 tax returns.27
A10: How do taxpayers with children at different income levels benefit from
the ARPA-expanded child credit?
Estimates from the Tax Policy Center compiled in Table 2 suggest that the ARPA-expanded child
credit is a near universally available benefit among taxpayers with children and provides the
largest benefit to the lowest-income taxpayers. Overall, the share of taxpayers with children
eligible for the credit is estimated to increase from 89.1% to 92.0%, with the largest gains
occurring among the lowest-income taxpayers (i.e., the share of such taxpayers receiving the
credit will increase from 72.6% to 83.2%). In addition, the lowest-income 20% of taxpayers are
estimated to see the largest gains in income, both as a share of their after-tax income and in dollar
terms. Specifically, the ARPA-expanded child credit is estimated to equal 15.2% of after-tax
income for the lowest-income taxpayers ($4,490), compared to 5.6% of their after-tax income
prior to ARPA ($1,220).
Table 2. Share of Taxpayers with Children Who Receive the Child Credit and Credit
Amount by Income Percentile in 2021, Before and After ARPA
Before ARPA
After ARPA
% of
Taxpayers
Who
Receive
the Credit
Benefit as
% of AfterTax
income
Average
Benefit
per
Taxpayer
% of
Taxpayers
Who
Receive the
Credit
Benefit as
% of AfterTax
income
Average
Benefit
per
Taxpayer
Lowest 20%
72.6%
5.6%
$1,220
83.2%
15.2%
$4,490
Second-Lowest 20%
92.6%
5.8%
$2,560
94.1%
9.6%
$4,940
Middle 20%
97.2%
3.9%
$2,900
97.6%
5.9%
$4,890
Second-Highest 20%
99.2%
2.4%
$2,880
99.2%
3.6%
$4,650
Highest 20%
87.0%
0.7%
$2,140
87.2%
0.8%
$2,720
All
89.1%
2.1%
$2,310
92.0%
3.8%
$4,380
Income
Percentilea
Source: Tax Policy Center Tables T21-0043 and T21-0045; see Appendix A.
Notes: Includes filing and non-filing taxpayers. Includes the $500 nonrefundable tax credit for other dependents.
Taxpayers with children are those claiming an exemption for children or with children qualifying for the Child
Tax Credit or EITC.
a. The income percentile classes used in this table are based on the income distribution for the entire
population and contain an equal number of people, not tax units. The breaks (in 2020 dollars) are as
follows: 20%, $25,500; 40%, $51,000; 60%, $91,100; 80%, $164,300; 90%, $240,900; 95%, $341,700; 99%,
$799,100; 99.9%, $3,496,400.
27 Internal Revenue Service, Individual Complete Report (Publication 1304), Table 3.3, Statistics of Income, 2018,
https://www.irs.gov/statistics/soi-tax-stats-individual-statistical-tables-by-size-of-adjusted-gross-income.
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
B. Administration of the ARPA-Expanded
Child Credit
B1. How was the ARPA-expanded child credit issued?
Unlike most tax benefits, which are received once a year as a lump sum after an income tax return
is filed, up to half of the 2021 child credit was issued in advance of 2021 returns being filed.
ARPA directed Treasury to issue half of the estimated 2021 credit in periodic payments beginning
after July 1, 2021 (these periodic payments will generally be equal in amount).28 The IRS issued
these payments as monthly installments. Taxpayers will claim the remaining half of the total 2021
credit when filing their 2021 income tax return in 2022. In January 2022, the White House
launched a website to help taxpayers, including those who are not required to file a tax return due
to their low incomes, claim the remainder of their child tax credit. The website——helps
taxpayers find resources or services to file their 2021 income tax return.
Like the expansion of the credit amount, the advance payment program was also temporary under
current law. Under ARPA, advance payments of the 2021 credit cannot be made before July 1,
2021, or after December 31, 2021.29
B2. How were the monthly advance payments calculated?
Advance payments of the 2021 child credit were based on an estimate of the credit taxpayers are
eligible to claim on their 2021 income tax return. In order to estimate a taxpayer’s 2021 child
credit, the IRS used data from their 2020 income tax return, or if that was not available, data from
their 2019 income tax return. The year of data used to estimate the 2021 credit is sometimes
referred to as the “reference year.” Since up to half of the 2021 credit could be issued in advance,
the IRS generally calculated 50% of the estimated 2021 credit amount and then issued that in
monthly payments.
For example, if a married couple filing jointly listed $75,000 of income and two young children
on a 2020 return—and those children were also young in 2021 (i.e., 0-5 years old)—the IRS
would have estimated their 2021 credit to be $7,200.30 The IRS would have issued half of that
amount—$3,600—in six monthly payments of $600, beginning July 15, 2021, and ending
December 15, 2021.
B3. Could taxpayers opt out of the advance payment program?
Yes, taxpayers could opt out by using the IRS’s Child Tax Credit Update Portal (also referred to
simply as “the update portal” in this report, or CTC-UP by the IRS).31 Among married joint filers,
both spouses had to opt out in order to stop all advance payments (otherwise half of the monthly
28 IRC §7527A.
29 IRC §7527A(f).
30 See IRC §7527A(b)(1)(D). With respect to estimating the children’s ages in 2021 to estimate the advance, “the ages
of such children (and the status of such children as qualifying children) are determined for such taxable year by taking
into account the passage of time since the reference taxable year.” The IRS already receives data from the SSA for tax
return processing purposes that includes children’s dates of birth, and hence their projected age by December 31, 2021,
can be determined.
31 This tool is available at https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
advance payments were issued to the spouse who did not opt out).32 Unless taxpayers opted out,
they were automatically enrolled in the advance payment program.
Taxpayers may have wanted to opt out of the advance payments if they preferred receiving the
benefit as part of their annual income tax refund. Taxpayers may have also wanted to opt out if
they were concerned that they might receive more in advance payments than they were actually
eligible for. Broadly, this could occur as a result of differences between information used to issue
advanced payments (i.e., 2020 or 2019 tax data) and information on their 2021 income tax return.
Specifically, it could occur due to changes in a variety of factors between 2021 and the reference
year used to calculate the advance payments, including (a) large changes in income, (b) changes
in the number of qualifying children (including in cases were children live with a different
divorced parent in alternating years), (c) changes in marital status, and (d) changes in principal
place of abode, or (e) a combination of these changes.33
In cases where the sum of advance payments is greater than the credit the taxpayer is eligible to
claim on their 2021 income tax return, taxpayers may need to repay the excess, either by reducing
their refund or by remitting payment to the IRS (see “B9. Will taxpayers need to pay back excess
amounts of the child credit?”).
B4. Were monthly payment amounts adjusted when the IRS received new
information?
ARPA allowed the IRS to adjust monthly payments for new information so that the total advance
a taxpayer received was 50% of their estimated 2021 credit.34 For example, if the IRS in August
received information that a taxpayer was eligible for a 2021 credit of $7,200 and began issuing
advance payments in September, this taxpayer would have generally been issued four monthly
payments of $900, which in total would equal half of their 2021 credit.35 Alternatively, in certain
situations the IRS issued different amounts of monthly payments such that the sum of all
32 See Question J6 “If I’m married filing jointly, does my spouse also need to unenroll?” and Question J7 “If my spouse
unenrolls and I don’t unenroll, what will happen?” on the IRS’s website. Internal Revenue Service, 2021 Child Tax
Credit and Advance Child Tax Credit Payments—Topic J: Unenrolling from Advance Payments, https://www.irs.gov/
credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-j-unenrolling-from-advancepayments.
33 If the taxpayer’s principal place of abode is not the United States in 2021, but it is in 2020 (or 2019, if 2020 data are
not available), then the refundable portion of their 2021 credit amount will be phased in using the earned income
formula. Hence, some low-income taxpayers may not be eligible for the full credit amount of $3,600 per young child
and $3,000 per older child, and may receive more in advance payments than they are eligible for. See question G6 “I
filed my 2020 tax return with a U.S. address although my child and I do not live in the United States. I received Letter
6417 at my U.S. address stating that the IRS will begin to disburse advance Child Tax Credit payments to me. What
can I do?” on the IRS’s website. Internal Revenue Service, 2021 Child Tax Credit and Advance Child Tax Credit
Payments—Topic G: Receiving Advance Child Tax Credit Payments, https://www.irs.gov/credits-deductions/2021child-tax-credit-and-advance-child-tax-credit-payments-topic-g-receiving-advance-child-tax-credit-payments.
34 See IRC §7527A(b)(3), §7527A(a)(3), §7527A(b)(1).
35 If the 2021 credit was estimated to be $7,200, then half of that—$3,600—could be issued in advance. If the taxpayer
received six monthly payments, the payments would thus equal $600 each month. If the taxpayer received four monthly
payments, the payments would equal $900 each month. According to the IRS, “Families who did not get a July
payment and are getting their first monthly payment in August will still receive their total advance payment for the
year. This means that the total payment will be spread over five months, rather than six, making each monthly payment
larger.” Internal Revenue Service, “IRS: Families now receiving August Child Tax Credit payments; still time for lowincome families to sign up,” press release, August 13, 2021, https://www.irs.gov/newsroom/irs-families-now-receivingaugust-child-tax-credit-payments-still-time-for-low-income-families-to-sign-up.
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
payments issued in 2021 was 50% of their estimated credit amount (i.e., the taxpayer is “made
whole”).36
Initially, taxpayers could only provide this information via the IRS’s Child Tax Credit Non-filer
Sign-up Tool beginning in mid-June of 2021. By the beginning of September 2021, eligible nonfilers could also use the GetCTC tool developed by Code for America in consultation with
Treasury.37 By the end of 2021, the White House was linking directly to the Code for America
non-filer tool.38
The statute also allowed adjustments that could reduce advance payment amounts. This could
have occurred when a taxpayer’s advance payments were estimated using 2019 tax data, but their
2020 return resulted in a smaller estimated 2021 credit (and hence smaller advance payments)
once it was filed and processed.39 It could have also occurred when a taxpayer updated their
information with the IRS using the agency’s update portal and that information resulted in a
smaller estimated 2021 credit.
The IRS, however, initially stated that it would only be able to accept information on the update
portal that could affect the advance amount in “late summer.” The IRS issued a press release at
the end of October stating that taxpayers could update their income information, which could
affect the amount of their November and December payments. However, taxpayers were unable
to use the update portal to update the number of children they had in 2021.40
36 This may be the case, for example, when the IRS made an error in issuing the first payments, as was the case with
certain ITIN filers. According to the IRS National Taxpayer Advocate, “Over one million taxpayers who filed their
returns with an ITIN did not receive their Child Tax Credit (CTC) monthly payment in July. The IRS has identified the
issue, which it fixed prior to issuing the August payments; the issue is not anticipated to occur again. But the fix comes
with confusion. Since the IRS erroneously did not make the July payment, it calculated the August payment based upon
the total amount of eligible AdvCTC and then divided it by five months (August-December). Good news: as of August
23, the IRS is retroactively issuing the July payment to these individuals. However, the July payment amount will be
based upon the total amount of eligible AdvCTC divided by six months (July-December) and then reduced by the
additional amount included in the August payment.... I will try to simplify by way of an example: Mary has one child
and based upon her 2020 income may have a CTC credit of $3,000. One half of that amount, $1,500, would be eligible
to be paid in six monthly payments ($250) as AdvCTC. If Mary filed her 2020 return with an ITIN and did not receive
her July payment the IRS calculated her August payment based upon a five-month schedule (August-December) and
paid Mary $300 in August ($1,500 divided by five payments). Now that the IRS is retroactively paying Mary her July
payment, she will be receiving $250 for the July payment based upon a six-month schedule (July-December, $1,500
divided by six payments) minus the additional $50 she received in August. Her July payment will be $200. Now to add
to Mary’s confusion, the IRS will be issuing the September payment in the correct amount of $250. All subsequent
payments should be $250.” Taxpayer Advocate Service, “NTA Blog: Advance Child Tax Credit: What You Should
Know: Part II,” August 26, 2021, https://www.taxpayeradvocate.irs.gov/news/nta-blog-advance-child-tax-credit-whatyou-should-know-part-ii/.
37 Code for America’s non-filer tool can be found at https://www.getctc.org/en.
38 See, for example, The White House, “Child Tax Credit for Non-Filers,” https://www.whitehouse.gov/child-taxcredit/sign-up/.
39 See, for example, the answer to question E4 “My 2019 tax return was used to determine my advance Child Tax
Credit payments. I recently filed my 2020 tax return with a different amount of income. Will the IRS update my
advance Child Tax Credit payment amounts?” on the IRS’s website. Internal Revenue Service, 2021 Child Tax Credit
and Advance Child Tax Credit Payments—Topic E: Advance Payment Process of the Child Tax Credit,
https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-e-advancepayment-process-of-the-child-tax-credit#e1#e1.
40 See Internal Revenue Service, “Child Tax Credit: Families with income changes must enter them in IRS online portal
on Monday to impact Nov. 15 payment; Spanish version coming in late November,” press release, October 29, 2021,
https://www.irs.gov/newsroom/child-tax-credit-families-with-income-changes-must-enter-them-in-irs-online-portal-onmonday-to-impact-nov-15-payment-spanish-version-coming-in-late-november. In late summer, the IRS stated that
taxpayers would be able to “make changes to your dependents, marital status and income and re-enroll if you
Congressional Research Service
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
B5. Was there an income threshold above which advance payments
were not issued?
No, the statute did not include an income threshold above which advance payments would not be
issued. (Higher-income taxpayers were eligible for a smaller credit compared to low- and
moderate-income taxpayers [see Figure 1].) In addition, the IRS never indicated that it would be
treating higher-income taxpayers differently than low- and moderate-income taxpayers for
purposes of advance payments. Like all taxpayers, higher-income taxpayers could have elected to
opt out of receiving advance payments using the update portal (see Appendix C for more
information).
B6. Did otherwise eligible households who, due to their low incomes, do not
normally file a tax return, automatically receive the advance payments?
No, the IRS had to have information from a 2020 or 2019 income tax return in order to calculate
the estimated 2021 credit amount, and then issue advance payments.41 (The IRS also issued
payments to taxpayers who used the non-filer portal to receive the first “stimulus check” payment
in 2020.)42 Eligible recipients who were generally not required to file an income tax return due to
their low incomes were encouraged to use the child credit non-filer portal (either the IRS tool or
the Code for America tool) to provide the necessary information to issue advance payments.43 If
taxpayers did not receive any advance payments in 2021, but are eligible for the 2021 credit, they
will generally receive the entire amount of the credit when they file their 2021 income tax return.
(However, if the taxpayer is subject to offset, the credit they receive with their 2021 tax return
could be reduced; see “B11. Could the advance payments of the credit and/or the credit claimed
on 2021 income tax returns be reduced for child support or other debts?”)
previously unenrolled.” Prior to that, the update portal could be used to unenroll from advance payments, make changes
to bank information, and update address information. See the answer to question A16 “When will I be able to update
my information?” at Internal Revenue Service, 2021 Child Tax Credit and Advance Child Tax Credit Payments—Topic
A: General Information, https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-creditpayments-topic-a-general-information#a16#a16.
41 Existing research suggests eligible households who did not receive advance payments of the credit tended to be lowincome. For example, see Natasha Pilkauskas and Katherine Michelmore, “Families with Low Incomes and the Child
Tax Credit: Who is Still Missing Out?” University of Michigan | Poverty Solutions, December 2021,
http://sites.fordschool.umich.edu/poverty2021/files/2021/12/PovertySolutions-Child-Tax-Credit-who-is-still-missingout-Decembe2021.pdf.
42 Eligible taxpayers for whom the IRS does not have tax information on file for 2020 or 2019 will not receive the
payments. Various outreach activities are under way to enroll these households. The White House, FACT SHEET:
Biden-Harris Administration Whole-of-Government Effort to Ensure Child Tax Credit Reaches All Eligible Families,
September 15, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/15/fact-sheet-bidenharris-administration-whole-of-government-effort-to-ensure-child-tax-credit-reaches-all-eligible-families/; and Gabriel
Zucker and Maximilian Hell, Getting the Child Tax Credit to Families With Low or No Incomes Means Using the Right
Data, Code for America, September 21, 2021, https://www.codeforamerica.org/news/getting-the-child-tax-credit-tofamilies-with-low-or-no-incomes-means-using-the-right-data/. Data suggest these families are more likely to be poor.
See Aravind Boddupalli, Where Are Families Most at Risk of Missing Out on the Expanded Child Tax Credit? Tax
Policy Center, October 21, 2021, https://www.taxpolicycenter.org/taxvox/where-are-families-most-risk-missing-outexpanded-child-tax-credit?&utm_source=%20urban_newsletters&utm_medium=news-DD&utm_term=TPC.
43 The tool is available at https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool. Taxpayers can
also use the Code for America non-filer tool at https://www.getctc.org/en. Code for America’s tool was developed in
consultation with Treasury. Unlike the IRS tool, the Code for American tool works on mobile devices and is available
in Spanish.
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
B7. Were there any limitations on how the advance payments of the credit
could be spent?
No, there are no limitations or restrictions on how the advance payments (or the amount received
after filing 2021 income tax returns) could be spent. For more information on recent research on
how recipients spent the advance payments, see “III. Estimates of How Families/Taxpayers Spent
the Child Credit” in Appendix A.
B8: How will taxpayers determine the amount of the credit they can claim on
their 2021 income tax return?
When a taxpayer files their 2021 return (in 2022), they will first calculate the total amount of the
2021 child credit they are eligible for (based on the number and ages of qualifying children,
income, and marital status for 2021). Then, the taxpayer will subtract from their total 2021 credit
the sum of advanced child credit payments they received during calendar year 2021. To help with
this calculation, the IRS is mailing a year-end summary statement (Letter 6419) to all taxpayers
who received advance payments during 2021.
For example, if an unmarried taxpayer had two young children (and filed as a head of household)
and less than $112,500 of income in 2020 and 2021, they would be eligible for a total child credit
for 2021 of $7,200. Since they would have received half of their total 2021 credit in advance
payments in calendar year 2021 ($3,600), they would ultimately claim the remaining half
($3,600) on their 2021 return. The taxpayer is effectively splitting their total credit between the
advance payments they received in 2021 (50% of their total credit) and the remaining 50% of the
credit they claim on their 2021 tax return.
In January 2022, the White House launched a website to help taxpayers, including those who are
not required to file a tax return due to their low incomes, claim the remainder of their child tax
credit. The website—https://www.childtaxcredit.gov/—helps taxpayers find resources or services
to file their 2021 income tax return. The site does not itself prepare or file 2021 income tax
returns.
B9. Will taxpayers need to pay back excess amounts of the child credit?
Potentially, yes, if they received more in advance payments than they are eligible to claim on their
2021 income tax returns. A taxpayer may have excess amounts of the credit due to changes in
income, marital status, or number of qualifying children between the year used to estimate the
advance (2020 or 2019) and 2021.
For example, if a taxpayer’s estimated advance payments totaled $5,400 (based on an estimate of
three qualifying young children) but the total 2021 credit they are actually eligible for is $3,600
(because they only had one qualifying young child), they would need to repay up to $1,800 (the
difference between $5,400 and $3,600).44 Excess payments caused by changes in the number of
qualifying children generally will not need to be repaid for lower- and moderate-income
taxpayers who are protected by a safe harbor (this safe harbor decreases as income rises). For
more information on the safe harbor, see “B10. How does the “safe harbor” work?” and Table D1. Repayment may either reduce a taxpayer’s 2021 tax refund or result in the taxpayer being
required to remit payment to the IRS (or be subject to offset of a future tax refund).
44 Three young children x $3,600 per young child = a maximum credit of $10,800. Since up to 50% of the credit can be
issued in advance payments, the maximum amount of advance payments equals $5,400.
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
B10. How does the “safe harbor” work?
Lower- and moderate-income taxpayers who received excess advance payments of the credit due
to changes in the number of qualifying children between 2021 and 2020 (or 2019, if 2020 data are
unavailable) may be protected from paying back some or all of these excess payments due to a
safe harbor. Effectively, after calculating any excess payments, the taxpayer subtracts from this
amount the total safe harbor amount they are eligible for to determine any amount they must
ultimately repay (either in terms of reducing their tax refund or remitting payment).
The safe harbor amount is first calculated by multiplying $2,000 times the difference in the
number of qualifying children between the reference year (2020 or 2019) and 2021. This is the
maximum amount of the safe harbor. The safe harbor amount is then phased down ratably—that
is, proportionally—for head of household filers with 2021 income between $50,000 and $100,000
and for married joint filers with 2021 income between $60,000 and $120,000.
For example, if a married taxpayer’s advance payments issued in 2021 totaled $5,400 (based on
an estimate of three qualifying young children) but the total 2021 credit they are actually eligible
for is $3,600 (because they only had one qualifying young child), their excess payments would
equal $1,800. If the taxpayer’s 2021 income was $75,000, they would be eligible for a $3,000
safe harbor.45 Since their safe harbor ($3,000) is greater than their excess payment amount
($1,800), the taxpayer would not need to repay the excess amount. For more information on the
safe harbor, see Table D-1.
The safe harbor does not apply in cases where excess payments arise from changes in income,
marital status, or principal place of abode between the reference year and 2021.
B11. Could the advance payments of the credit and/or the credit claimed on
2021 income tax returns be reduced for child support or other debts?
The advance payments of the child credit were generally exempt from offset for certain past-due
debts the recipient owed (including past-due child support).46 In other words, the monthly
advance payments issued in 2021 were not be reduced for these debts before they were issued by
the Treasury. However, the portion of the credit claimed on 2021 income tax returns is subject to
offset. In practical terms, that means that when a taxpayer files their 2021 tax return in 2022 and
claims the remaining portion of the 2021 child credit, the portion of their 2021 tax refund
attributable to the child credit can be offset.
In addition to the offset mechanism—which effectively reduces a government payment before it
is issued by Treasury—creditors may also recoup past-due debts through garnishment and levy
actions. Practically, these occur after a payment is issued (e.g., deposited in a bank account).
There are no statutory provisions at the federal level that protect the child credit—received either
as advance payments or claimed on an income tax return—from garnishment or levy actions.
45 The maximum safe harbor they would be eligible for would be $4,000 ($2,000 times the next difference in the
number of qualifying children, which is two in this example.) The taxpayer’s income places them in the phaseout range
of the safe harbor and their maximum safe harbor would be reduced by 25% [=($75,000-$60,000)/($120,000-$60,000)]
from $4,000 to $3,000.
46 In this report, the term offset refers to the Treasury Offset Program, which “collects past-due (delinquent) debts (for
example, child support payments) that people owe to state and federal agencies.” For more information, see Bureau of
Fiscal Service, Treasury Offset Program, https://fiscal.treasury.gov/top/.
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B12. Does receipt of the credit—either in the form of advance payments or
claimed on a tax return—affect eligibility for other government programs?
No, receipt of the child credit will not affect eligibility for or the amount of other federally funded
government programs. Under a permanent provision of the Internal Revenue Code, tax credits,
including the child tax credit—whether received as advance payments or claimed on an income
tax return—do not count as income or resources for a 12-month period in determining eligibility
for, or the amount of assistance provided by, any federally funded public benefit program.47
B13. Is the ARPA-expanded child credit—either in the form of advance
payments or claimed on a tax return—taxable?
No, the child credit is not subject to federal taxation, but in some cases, the expanded credit may
affect state liabilities.48 At the federal level, tax credits, including the ARPA-expanded child
credit, are not considered taxable income. This is the case regardless of whether the credit is
claimed on a tax return or issued as advance payments.
B14. Did Treasury update wage withholding schedules to reflect that up to half
of the credit was issued as advance payments before 2021 tax returns are filed?
No, Treasury did not automatically update the amount of income taxes withheld from workers’
paychecks to take into account that up to half of the 2021 credit was issued in advance (and hence
not claimed on 2021 income tax returns). Taxpayers could have manually adjusted their
withholding, for example by updating their IRS Form W-4 with their employer.
B15. How many advance payments of the 2021 credit were issued?
Data from Treasury indicate that between 35 million and 36 million families have received a
monthly advance payment of the credit between July and December 2021. In total, these
payments have equaled over $93 billion, averaging between $423 and $444 per recipient per
month.
These numbers were subject to change from month to month as taxpayers enrolled in advance
payments, unenrolled from advance payments, or provided information that could change the
amounts. Between June 14 and November 15, 2021, taxpayers were able to enroll to receive the
payments using a non-filer portal (initially only with the IRS tool, but by September, they could
also use the Code for America tool). Beginning in late June of 2021, taxpayers could also opt out
47 IRC §6409.
48
In some cases, the expanded child credit may affect state liabilities, as discussed in a report by Elaine Maag and
David Weiner of the Tax Policy Center: “Although Oklahoma is the only state where taxpayers will benefit from its
links to the federal CTC, it is not the only state with taxpayers who will be affected by the federal change. About 1
million households across other states will see their state income taxes increase as their federal income taxes drop from
the larger CTC. Three-quarters of those taxpayers are in states with a federal income tax deduction. That is, these states
allow taxpayers to reduce their taxable income by the amount of their federal income tax bill. If federal taxes drop,
more income will be taxed at the state level. Other interactions between federal and state laws cause the state tax
increase for other households. For example, some states limit certain state credits to federal tax liability. With lower
federal tax liability because of the expanded CTC, households can claim less in state credits. This can occur, for
example, in Maryland and New York.” Elaine Maag and David Weiner, How Increasing the Federal EITC and CTC
Could Affect State Taxes, Tax Policy Center, April 22, 2021, p. 7, https://www.taxpolicycenter.org/publications/howincreasing-federal-eitc-and-ctc-could-affect-state-taxes/full.
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of using the update portal (CTC-UP).49 Taxpayers had until November 29, 2021, to make
allowable changes to their information using CTC-UP for remaining advance payments.
Table 3. Advanced Payments of the 2021 ARPA-Expanded Child Credit by Month
Total Number of
Payments
Number of
Qualifying
Children
Total Amount of
Payments
Average
Payment
Amount
December 2021
36.1 million
61.2 million
$16.0 billion
$444
November 2021
36.1 million
61.3 million
$15.7 billion
$435
October 2021
36.0 million
61.1 million
$15.5 billion
$430
September 2021
35.5 million
60.0 million
$15.2 billion
$428
August 2021
36.0 million
60.9 million
$15.4 billion
$428
July 2021
35.2 million
59.3 million
$14.9 billion
$423
Sources: U.S. Treasury: Office of Tax Analysis, “Advancing the Child Tax Credit,” available at
https://home.treasury.gov/policy-issues/tax-policy/office-of-tax-analysis.
Note: The numbers shown reflect advance CTC payments disbursed to eligible recipients based on taxpayer
account information and do not account for reversed or undeliverable advance CTC payments.
Excluding the payments disbursed in September 2021, there has generally been a net increase in
the number of payments made and number of qualifying children living in families receiving
these payments over the past six months. In September, a technical issue resulted in less than 2%
of recipients failing to receive their monthly payments, according to the IRS.50 The IRS issued a
statement that these payments were generally issued at the end of September.
B16: How do low-income households that are not required to file a 2021
income tax return claim the remainder of the child credit?
In order to claim the remainder of the total 2021 credit (or if they received no advance payments,
all of the 2021 credit), households must file a 2021 income tax return. Some households’ incomes
are so low that they do not owe income taxes and are not required to file a tax return in 2021.
Nonetheless, even though these families are not required to file a tax return, they must do so in
order to receive the remainder of the 2021 child credit. While some of these eligible nonfilers
may have already filed a tax return during the traditional filing season to receive the remainder of
the credit, others may have been unaware of this requirement and failed to do so. The traditional
filing season for 2021 returns ended April 18, 2022, absent an extension.
Eligible nonfiling households who missed the filing deadline can still file their 2021 returns to
receive the remainder of the 2021 child credit using the nonfiler portal created by Code for
America at GetCTC.org. This portal opened in 2022 after the traditional filing season for 2021
returns ended.51
49 See White House, “Child Tax Credit for Non-Filers,” https://www.whitehouse.gov/child-tax-credit/sign-up/.
50 Internal Revenue Service, “IRS Statement – Advance Child Tax Credit Payments,” press release, September 24,
2021, https://www.irs.gov/newsroom/irs-statement-advance-child-tax-credit-payments.
51 See Brian Faler, “Fearing filing season chaos, IRS hits pause on web tool for Child Tax Credit,” Politico, March 4,
2022, and Tami Luhby, “Biden administration renews effort to get enhanced child tax credit to low-income families,”
CNN, May 11, 2022.
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C. Territorial Residents and the Child Credit
C1. Did territorial residents receive the child credit before ARPA?
It is unclear whether and to what extent residents of territories received the child credit before
ARPA. But available information suggests that the credit they received prior to ARPA was
generally less than the amount received by residents of the United States in similar circumstances
(i.e., same marital status, income, and number of children).
Puerto Rico’s income tax does not include a child credit. Prior to ARPA, residents of Puerto Rico
with three or more children could receive the additional child credit (ACTC) under the
“alternative formula.”52 (The ACTC is the amount of the credit that is greater than income taxes
owed, and is also referred to as the “refundable portion” of the credit.) Under the alternative
formula, the ACTC effectively equals 7.65% of earned income up to the maximum ACTC per
child, which was $1,400 per child before ARPA. Puerto Rican residents applied for the ACTC
under the alternative formula directly with the IRS. The alternative formula is, in most cases, less
generous than the ACTC calculated under the earned income formula.53 Because only families
with three or more children could receive the ACTC under the alternative formula, Puerto Rican
families with one or two children did not receive the ACTC.
While the territorial governments of American Samoa and mirror-code territories may have had
child credits under their own internal tax laws, it is unclear whether and to what extent these
territorial governments paid out these credits from local funds.54 Like residents of Puerto Rico,
residents of these territories with three or more children could generally receive the ACTC under
the alternative formula (and hence families with fewer than three children could not receive the
ACTC). Unlike residents of Puerto Rico, residents of American Samoa, Guam, the
Commonwealth of the Northern Mariana Islands (CNMI), and the United States Virgin Islands
(USVI) applied for the ACTC with their territorial governments, with the IRS issuing aggregate
payments to the respective territorial governments to cover the costs of the child credit
(sometimes referred to as a “cover-over” payment).55 (See Table E-1.)
C2. How did ARPA change the child credit for territorial residents in 2021?
Broadly, ARPA provided clarity on both the amount of the credit territorial residents can receive
and the federal funding to cover the cost of this benefit permanently, including for 2021. ARPA
52 Throughout this report, the discussion of residents of U.S. territories will be of bona fide residents of these territories.
According to the Joint Committee on Taxation, “[a] bona fide resident of a territory for a taxable year is generally an
individual (1) who is present for at least 183 days during the taxable year in the territory, and (2) who does not have
either a tax home outside the territory or a closer connection to the United States or a foreign country than to the
territory.... Broadly, a bona fide individual resident of a territory is exempt from U.S. tax on income derived from
sources within that territory but is subject to U.S. tax on U.S.-source and non-territory-source income.” Further, this
discussion generally focuses on territorial residents who are not required to file a federal income tax return, and hence
do not receive the child credit with the federal income tax return.
53 Under the earned income formula, the ACTC is calculated as 15% of earned income above $2,500, up to the
maximum ACTC per child of $1,400 (adjusted for inflation). Beginning in 2026, the formula is scheduled to be 15% of
earned income above $3,000 up to a maximum of $1,000 per child.
54 A mirror code territory is a territory whose own territorial tax law is effectively the U.S. Internal Revenue Code
(IRC) with the territory’s name substituted for the United States wherever the term United States is used in the IRC
(i.e., it is a “mirror” of the IRC).
55 The IRS Chief Financial Officer (CFO) made these aggregate payments to territorial governments prior to ARPA.
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generally allowed territorial residents to receive the entire amount of the ARPA-expanded
credit.56 Residents of Puerto Rico are eligible to receive the ARPA-expanded child credit when
they file a 2021 tax return directly with the IRS.57 Residents of American Samoa can receive the
full amount of the ARPA-expanded child credit. If American Samoa has an approved plan to
distribute these payments, then Treasury is directed to provide the American Samoan government
funds to cover their full cost, and the American Samoan government will pay out the benefit to its
residents. Otherwise, residents of American Samoa will be able to file a return with the IRS to
directly claim the benefit. Residents of mirror-code territories can receive the full benefit of the
ARPA-expanded child credit. Residents of mirror-code territories will receive the benefit from
their respective territorial governments, with the U.S. Treasury directed to provide each
government with a “cover-over” payment for the total cost of the benefit. (See Table E-1.)
C3. Did territorial residents receive the advance payments of the 2021 credit?
No, territorial residents did not receive advance payments from the U.S. Treasury. Residents of
Puerto Rico, who receive their child credit payments directly from the IRS, are ineligible to
participate in the federal advance payment program. Hence, they will receive the full benefit
when they file a 2021 tax return with the IRS in early 2022.
If American Samoa and mirror-code territorial governments elect to advance the 2021 ARPAexpanded credit directly to their residents in a manner similar to the federal advance program, the
law provides that Treasury will provide these governments with an additional $300,000 per
territory for the associated administrative costs (in addition to the amounts to cover the aggregate
costs of the benefit itself).58
C4. How did ARPA change the child credit for territorial residents after 2021?
Broadly, ARPA provided clarity on both the amount of the benefit territorial residents can receive
and the federal funding to cover the cost of this benefit permanently—that is, after 2021.
Residents of Puerto Rico—irrespective of the number of children they have—will be eligible to
receive the ACTC under the alternative formula, applying for this benefit directly with the IRS. If
American Samoa has an approved plan to distribute to its residents child credit amounts—both
the refundable portion (i.e., the ACTC) and the nonrefundable portion—that reflect those in the
Internal Revenue Code (IRC) for a given year, then Treasury is directed to provide the American
Samoan government funds to cover the full cost of this credit.59 If no such plan is in effect,
American Samoan residents may apply directly with the IRS like Puerto Rican residents (i.e.,
they can apply directly with the IRS for the ACTC under the alternative formula, disregarding the
limitation for three or more children). Residents of the mirror-code territories can receive child
credit amounts—both the refundable portion (i.e., the ACTC) and the nonrefundable portion—
56 For more information, see Taxpayer Advocate Service, TAS Tax Tip: 2021 Advance Child Tax Credit information for
U.S. Territory residents, August 25, 2021, https://www.taxpayeradvocate.irs.gov/news/tas-tax-tip-2021-advance-childtax-credit-information-for-u-s-territory-residents/.
57 IRS Form 1040-SS or IRS Form 1040-PR.
58 For example, the governor of the Commonwealth of the Northern Mariana Islands issued a press release stating that
its local tax authority, the Department of Finance, Division of Revenue and Taxation (DRT), is implementing a plan.
Office of the Governor of the Commonwealth of the Northern Mariana Islands, “DRT planning for advanced payments
of the Expanded Child Tax Credit,” press release, May 13, 2021, https://governor.gov.mp/news/press-releases/drtplanning-for-advanced-payments-of-the-expanded-child-tax-credit/.
59 This includes the refundable portion of the child credit—the ACTC—calculated under the earned income formula.
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that reflect those in the Internal Revenue Code (IRC) for a given year. Treasury is directed to
provide these governments funds to cover the full cost of this credit. (See Table E-1.)
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Appendix A. Selected Research on the
ARPA-Expanded Child Credit
**Embedded hyperlinks in the appendices of this report are not visible in the PDF version of this
document. Please refer to the HTML version of this report available on crs.gov to view these
links.**
A variety of research studies have evaluated the effects of the ARPA-expanded child credit, either
as a standalone provision or in combination with other provisions.60 A selection of these studies is
provided in this appendix. In some cases, these studies examined the impact of the ARPAexpanded credit if it were to be permanent or extended as part of the Biden Administration’s
American Families Plan.
I. Poverty and Economic Security
Table A-1 provides a selected list of studies that examine the ARPA-expanded child credit’s
impact on economic security and poverty as a stand-alone provision. Of note, in 2019, the
National Academy of Sciences released a study evaluating the poverty reduction impact of a child
allowance similarly structured to the ARPA-expanded child credit.61
60 For example, see Zachary Parolin et al., The American Rescue Plan could cut child poverty by more than half, Center
on Poverty and Social Policy at Columbia University, March 11, 2021, https://www.povertycenter.columbia.edu/newsinternal/2021/presidential-policy/biden-economic-relief-proposal-poverty-impact. Or for a comparison of the average
value of all child tax benefits in 2021 by proposal, see Table 8 in Alex Brill, Kyle Pomerleau, and Grant M. Seiter, The
Tax Benefits of Parenthood: A History and Analysis of Current Proposals, American Enterprise Institute, February
2021, https://www.aei.org/research-products/report/the-tax-benefits-of-parenthood-a-history-and-analysis-of-currentproposals/.
61 National Academies of Sciences, Engineering, and Medicine, A Roadmap to Reducing Child Poverty, 2019,
https://www.nap.edu/catalog/25246/a-roadmap-to-reducing-child-poverty.
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Table A-1. Selected Research on the ARPA-Expanded Child Credit’s Impact on
Poverty and Economic Security
Study
Major Impact/Outcome Evaluated
Notes
Tax Policy Center, Child
Tax Credit Recipients
Experienced a Larger
Decline in Food Insecurity
and a Similar Change in
Employment as
Nonrecipients Between
2020 and 2021, Michael
Karpman et al.
Employment and Material
Hardship: Estimates from survey data
of changes in material hardship and
employment for adults living with
children who received advanced CTC
payments compared to changes for
adults with and without children who did
not get the payments. Data are from the
2020 and 2021 rounds of the Urban
Institute’s Well-Being and Basic Needs
Survey (WBNS). WBNS is a nationally
representative, internet-based survey of
adults ages 18 to 64 designed to monitor
changes in individual and family wellbeing as policymakers consider changes
to federal safety net programs.
“The temporary expansion of the child
tax credit (CTC) in the American
Rescue Plan delivered monthly payments
to most families with children from July
through December 2021. We use data
from the Urban Institute’s Well-Being
and Basic Needs Survey to compare
adults ages 18 to 64 that received the
payments with those that did not. We
find the share of adults who received the
payments reporting food insecurity
declined more than the share of adults
who did not receive the payments. We
found no significant differences in the
changes in employment between
December 2020 and December 2021 for
adults who received the payments and
adults who did not receive the
payments.”
Food Insecurity: Longitudinal patterns
of food insecurity and children’s dietary
intake across the first half of monthly
expanded CTC payments among survey
participants.
“This study examined food security and
children’s dietary intake after three
months of expanded CTC payments.
Parents completed online surveys before
and after three months of CTC
payments. Among parents participating
in the expansion, food and beverage
purchases were the most common use
of expanded CTC funds (45.9 percent),
particularly in households with very low
food security (63.0 percent). From
before to midway through the CTC
expansion, very low food security
decreased from 12.7 percent to 5.6
percent, and simultaneously, food
security increased from 57.4 percent to
66.4 percent. The CTC expansion was
also associated with decreases in
children’s consumption of added sugar,
sugar-sweetened beverages, and
sweetened fruit beverages. No changes
were observed in children’s intake of
other dietary components.”
Variety of Economic and Social
Well-Being Outcomes: Researchers
surveyed participants about a variety of
outcomes including measures of
employment, savings, credit usage, wellbeing, and material hardship (e.g.,
skipped housing payments, food
insecurity).
“We utilized the NORC/Amerispeak
probability-based online panel to survey
a nationally-representative group of
1,782 American parents eligible for the
credit and a comparison group of 2,015
ineligible households ... we find that
families used the CTC to cover routine
expenses without reducing their
employment. Eligible families
experienced improved nutrition,
decreased reliance on credit cards and
May 9, 2022
Health Affairs, Patterns of
Food Security and Dietary
Intake During the First Half
of the Child Tax Credit
Expansion, by Elizabeth
Adams et al.
May 2022
Washington University in
St. Louis Social Policy
Institute, The Impacts of
the 2021 Expanded Child
Tax Credit on Family
Employment, Nutrition, and
Financial Well-Being, by
Leah Hamilton et al.
April 2022
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Study
Major Impact/Outcome Evaluated
Notes
other high-risk financial services, and
also made long term educational
investments for both parents and
children. We find that these changes
were especially promising for Black,
Hispanic, and other minority families,
along with low- and moderate-income
families, suggesting that the expanded
CTC may be an important tool for
addressing both racial financial inequality
and a widening income gap in the United
States.”
Washington University in
St. Louis Social Policy
Institute, Expanded Child
Tax Credit Payments Did
Not Reduce Employment,
by Stephen Roll, Leah
Hamilton, and Yung Chun
Employment: Estimates of the change
in labor supply from child tax credit
expansion proposals using Census
Household Pulse survey.
“There is no evidence within the Census
Household Pulse data—a large, highquality, nationally-representative data
source—that CTC payments led parents
to leave the workforce. Our analyses
also found no significant differences in
employment rates for low-income,
middle-income, or high-income families
receiving the CTC. We also see no
evidence that the CTC is increasing the
proportion of parents who are staying
home with their children rather than
working.”
Employment: Estimates of the labor
supply response using data from the
monthly Current Population Survey
(CPS) files and the Census Household
Pulse Survey microdata from April
through December 2021.
“Across both samples and several model
specifications, we find very small,
inconsistently signed, and statistically
insignificant impacts of the CTC both on
employment in the prior week and on
active participation in the labor force
among adults living in households with
children. Further, labor supply responses
to the policy change do not differ for
households for whom the CTC’s
expansion eliminated a previous work
incentive. Thus, our analyses of realworld data suggest that the expanded
CTC did not have negative short-term
employment effects that offset its
documented reductions in poverty and
hardship.”
Child poverty on a monthly basis:
Simulated estimates of child poverty
rates and number of children in poverty
using the Supplemental Poverty Measure
(SPM) in January 2022, after advanced
payments of the child tax credit had
ended. These estimates are also
provided by race/ethnicity.
“The monthly child poverty rate
increased from 12.1 percent in
December 2021 to 17 percent in January
2022, the highest rate since the end of
2020. The 4.9 percentage point (41
percent) increase in poverty represents
3.7 million more children in poverty due
to the expiration of the monthly Child
Tax Credit payments. Latino and Black
children experienced the largest
percentage-point increases in poverty
(7.1 percentage points and 5.9
percentage points, respectively).”
October 2021, Revised
January 26, 2022, Revised
March 18, 2022
NBER Working Paper,
Effects of the Expanded
Child Tax Credit on
Employment Outcomes:
Evidence from Real World
Data from April to
December 2021, by
Elizabeth Ananat et al.
October 10, 2021,
Revised March 2022
Columbia’s Center on
Poverty and Social Policy,
3.7 Million More children in
Poverty in January 2022
Without Monthly Child Tax
Credit, by Zachary Parolin,
Sophie Collyer, and
Megan A. Curran.
February 17, 2022
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Study
Major Impact/Outcome Evaluated
Notes
[Working Paper],
Investigating the Effects of
the 2021 Child Tax Credit
Expansion on Poverty and
Maternal Employment, by
Jacob Bastian
Child and Adult Poverty: Simulated
estimates of adult and child poverty
(numbers and rates) using both the
official poverty measure (plus the child
credit amounts) and the Supplemental
Poverty Measure (SPM), which already
includes these amounts in resources.
“Using my preferred approach, I find that
the 2021 CTC would lead 413,000
adults—including 325,000 mothers and
96,000 poor adults—to stop working.
Over a full year, the CTC would reduce
adult and child poverty rates from 11.1%
and 17.2%, to 7.4% and 11.2%. Overall,
the 2021 CTC reduces adult and child
poverty by 33.3% and 34.9%, and
reduces deep poverty by 43.5% and
51.3%, larger than the impact of the
2018 CTC and Earned Income Tax
Credit combined.”
January 19, 2022
Employment: Simulated estimates of
the labor supply response of parents to
the ARPA-expanded child credit using
both the American Community Survey
(ACS) and the Current Population
Survey (CPS).
Columbia’s Center on
Poverty and Social Policy,
Sixth Child Tax Credit
Payment Kept 3.7 Million
Children Out of Poverty in
December, by Zachary
Parolin and Megan A.
Curran.
Child poverty on a monthly basis:
Simulated estimates of child poverty
rates and number of children in poverty
using the Supplemental Poverty Measure
(SPM) in December 2021, after the sixth
advance payment of the child credit.
These estimates are also provided by
race/ethnicity.
“The Child Tax Credit reached 61.2
million children in December 2021, an
increase of 2 million children over six
months from the rollout to 59.3 million
children in July. Increasing coverage
increased its anti-poverty effects: the
first payment kept 3 million children
from poverty in July and the sixth Child
Tax Credit payment kept 3.7 million
children from poverty in December. On
its own, the Child Tax Credit reduced
monthly child poverty by close to 30
percent. In the absence of a January
payment, the monthly child poverty rate
could potentially increase from 12.1
percent to at least 17.1 percent—the
highest monthly child poverty rate since
December 2020.”
Food Insufficiency: Researchers
estimated the impact of the first monthly
CTC payment (i.e., the July payment) on
food insufficiency based on data from the
U.S. Census Bureau’s Household Pulse
Survey. The survey asks respondents: “In
the last 7 days, which of these
statements best describes the food eaten
in your household?” Respondents who
choose the answers “Sometimes not
enough to eat” or “Often not enough to
eat” are considered to be food
insufficient.
“We found that the first round of
advance CTC payments in July 2021 was
associated with a 26% reduction in food
insufficiency in US households with
children. Nearly two-thirds of families
with children reported receiving an
advance CTC payment, likely a
considerably lower amount than
ultimately will receive it. The small
percentage of households without
children that reported receiving a CTC
payment may have had custody changes
or had a child who aged out of
eligibility.”
January 18, 2022
Journal of the American
Medical Association
(JAMA) Network Open,
Association of the
Implementation of Child
Tax Credit Advance
Payments with Food
Insufficiency in US
Households, by Paul R.
Shafer et al.
January 13, 2022
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Study
Major Impact/Outcome Evaluated
Notes
Columbia’s Center on
Poverty and Social Policy,
November Child Tax Credit
payment kept 3.8 million
children from poverty
Child poverty on a monthly basis:
Simulated estimates of child poverty
rates and number of children in poverty
using the Supplemental Poverty Measure
(SPM) in November 2021, after the fifth
advance payment of the child credit.
These estimates are also provided by
race/ethnicity.
“The fifth monthly payment of the
expanded Child Tax Credit kept 3.8
million children from poverty in
November 2021. The Child Tax Credit
reached 61.3 million children in
November and, on its own, contributed
to a 5.1 percentage point (29.4 percent)
reduction in child poverty compared to
what the monthly poverty rate in
November would have been in its
absence.”
Child Poverty: Simulated estimates of
the number of children who would
experience reduced income and fall
either into poverty or deeper into
poverty if the ARPA-expanded child tax
credit were not extended, relative to
circumstances if the expansion were
extended. Estimates are made using 2018
data and simulate the impact in a
nonrecessionary economy. These
estimates are provided at the state level.
“An estimated 9.9 million children are at
risk of slipping back below the poverty
line or deeper into poverty if the
[ARPA] expansion is not extended....
These include 3.8 million Latino, 2.9
million white, 2.1 million Black, 426,000
Asian, and 280,000 American Indian or
Alaska Native (AIAN) children.”
November 30, 2021
Child poverty on a monthly basis:
Simulated estimates of child poverty
rates and number of children in poverty
using the Supplemental Poverty Measure
(SPM) in October 2021, after the fourth
advance payment of the child credit.
These estimates are also provided by
race/ethnicity.
“The fourth monthly payment of the
expanded Child Tax Credit kept 3.6
million children from poverty in October
2021. The Child Tax Credit reached
61.1 million children in October and, on
its own, contributed to a 4.9 percentage
point (28 percent) reduction in child
poverty compared to what the monthly
poverty rate in October would have
been in its absence.”
JPMorgan Chase & Co.,
Household Cash Balance
Pulse: Family Edition
Cash balances: De-identified
administrative banking data reporting
cash account balances.
“Families who received advanced CTC in
2021 had balances in September that
were 70 percent higher than two years
prior, while families without kids had
balances that were 50 percent higher....
In this sense, advanced CTC payments
may be helping families with kids
maintain elevated cash balances.”
Child poverty: Simulated estimates of
child poverty rates, number of children
in deep poverty, and poverty gap under
several scenarios. Those scenarios
include the full ARPA expansion of the
child credit, full refundability of the preARPA credit (i.e., $2,000 per child), and
an increase of the pre-ARPA credit
without full refundability. Estimates are
made using 2018 data and simulate
impacts in a nonrecessionary economy.
“Treating the TCJA-era [child credit] as
the baseline, we find that the full ARPA
expansion reduces child poverty by 40
percent, introducing full refundability
alone reduces it by 19 percent, and
introducing the dollar amount expansion
alone reduces it by only 7 percent. The
full ARPA expansion reduces deep child
poverty by 49 percent, introducing full
refundability alone reduces it by 32
percent, and introducing the dollar
amount expansion alone reduces it by
only 2 percent. The full ARPA expansion
reduces the average child poverty gap by
December 15, 2021
Center on Budget and
Policy Priorities (CBPP), If
Congress Fails to Act,
Monthly Child Tax Credit
Payments Will Stop, Child
Poverty Reductions Will Be
Lost, by Kris Cox, Chuck
Marr, Arloc Sherman, and
Stephanie Hingtgen
December 3, 2021
Columbia’s Center on
Poverty and Social Policy,
October Child Tax Credit
payment kept 3.6 million
children from poverty
November 2021
Jain Family Institute,
Analysis of Full Refundability
of the Child Tax Credit
Without Expansion, by Jack
Landry and Stephen
Nuñez
October 28, 2021
Congressional Research Service
26
The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Study
Columbia’s Center on
Poverty and Social Policy,
Expanded Child Tax Credit
Continues to Keep Millions
of Children from Poverty in
September
October 27, 2021
Becker Friedman Institute
for Economics at the
University of Chicago, The
Anti-Poverty, Targeting, and
Labor Supply Effects of the
Proposed Child Tax Credit
Expansion, by Kevin
Corinth et al.
October 7, 2021
Major Impact/Outcome Evaluated
Notes
Other Impacts: Simulated estimates of
the budgetary cost of the child credit
under these different scenarios.
$638, introducing full refundability alone
reduces it by $363, and introducing the
dollar amount expansion alone reduces
it by only $73. The TCJA-era CTC costs
about $117 billion per year. The full
ARPA CTC expansion would raise that
to roughly $216 billion (+$ 99 billion);
extending full refundability alone would
raise it to $134 billion (+ $17 billion);
the dollar amount expansion alone
would raise it to $162 billion (+$45
billion).”
Child poverty on a monthly basis:
Simulated estimates of child poverty
rates and number of children in poverty
using the Supplemental Poverty Measure
(SPM) in September 2021, after the third
advance payment of the child credit.
These estimates are also provided by
race/ethnicity.
“The third monthly payment of the
expanded Child Tax Credit (CTC) kept
3.4 million children from poverty in
September 2021. The monthly child
poverty rate increased between August
and September, from 11.5 percent to
13.2 percent, due to the expiration of
expanded unemployment benefits across
the country and the rollback of
Supplemental Nutrition Assistance
Program (SNAP) emergency allotment
benefits in some states. However, the
Child Tax Credit contributed to a 4.6
percentage point (26 percent) reduction
in child poverty compared to what the
monthly poverty rate in September
would have been in its absence.”
Employment: Simulated estimates of
the labor supply response of parents to
the ARPA-expanded child credit. These
estimates are made using 2016 survey
and administrative data included in the
Comprehensive Income Dataset (CID).
Child Poverty: Simulated estimates of
the impact of the ARPA-expanded child
tax credit on child poverty rates
incorporating estimates of labor supply
responses to the child tax credit. These
estimates are made using 2016 survey
and administrative data included in CID.
“By replacing the [prior law child tax
credit] TCJA CTC (which contained
substantial work incentives akin to the
EITC) with a universal basic income-type
benefit, the CTC expansion reduces the
return to working at all by at least
$2,000 per child for most workers with
children. Relying on elasticity estimates
consistent with mainstream simulation
models and the academic literature, we
estimate that this change in policy would
lead 1.5 million workers (constituting
2.6% of all working parents) to exit the
labor force. The decline in employment
and the consequent earnings loss would
mean that child poverty would only fall
by 22%.”
Congressional Research Service
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Study
Major Impact/Outcome Evaluated
Notes
National Bureau of
Economic Research
(NBER), Estimating the Net
Fiscal Cost of a Child Tax
Credit Expansion, by Jacob
Goldin, Elaine Maag, and
Katherine Michelmore
Employment: Estimates of the change
in labor supply from child tax credit
expansion proposals using 2017 data.
Fiscal Cost: Simulated estimates of the
direct costs of the child tax credit
expansion proposals. These include the
costs of increased benefits, changes in
tax revenue from labor supply
responses, and longer-term tax revenue
changes attributable to children’s future
earnings. Simulations are based on 2017
data.
“We study the fiscal cost of three such
proposals that would expand
refundability of the credit to low-income
children, increase the maximum credit
amount, and/or eliminate the income
phase-out to make the credit universal.
For each proposal, we use the Current
Population Survey to estimate three
components of the net fiscal cost: the
direct cost (additional tax refunds or
lower tax liability), revenue changes due
to taxpayers’ labor supply responses,
and long-term changes in tax revenue
due to changes in children’s future
earnings. We find that direct costs are
by far the most important component
but that long-term earning changes also
play an important role, offsetting 20% of
the direct costs of making the credit fully
refundable. In contrast, labor supply
responses modestly contribute to the
fiscal cost of the CTC expansions we
model.”
Child poverty on a monthly basis:
Simulated estimates of child poverty
rates and number of children in poverty
using the Supplemental Poverty Measure
(SPM) in August 2021, after the second
advance payment of the child credit.
These estimates are also provided by
race/ethnicity.
“The second monthly payment of the
expanded Child Tax Credit (CTC) lifted
3.5 million children out of poverty in
August 2021. The child poverty rate
declined from 11.9 percent in July 2021
(the month featuring the first CTC
payment) to 11.5 percent in August
2021. Without the CTC, the monthly
child poverty rate in August 2021 would
have been 16.2 percent. The CTC
contributed to a 4.7 percentage point
(29 percent) reduction in child poverty
compared to what the monthly poverty
rate in August would have been in its
absence.”
Child Poverty: Simulated estimates of
the number of children in poverty with
and without full refundability. Specifically,
the authors estimate child poverty rates
with the ARPA-expanded child credit
and compare them to child poverty rates
with the ARPA-expanded child credit
with the prior-law earned income
formula used to phase-in the credit for
low-income taxpayers. Estimates are
made using 2018 data and simulate the
impact in a nonrecessionary economy.
(Note that when simulating the ARPAexpanded child credit with the prior-law
earned income formula, the authors
eliminate the statutory maximum
amount of the refundable portion of the
credit of $1,400 per child.)
“The Rescue Plan’s Child Tax Credit
expansions are expected to cut child
poverty by over 40 percent, lifting more
than 4 million children out of
poverty. More than 80 percent of this
effect [3.6 million children] comes from
the provision making the full credit
available to families even if they have low
or no income.”
October 2021, Revised
December 2021,
Published in 2022
Columbia’s Center on
Poverty and Social Policy,
Second Child Tax Credit
Payment Keeps 3.5 Million
Children Out of Poverty, by
Zachary Parolin and
Megan Curran
September 24, 2021
Center on Budget and
Policy Priorities (CBPP),
Earnings Requirement
Would Undermine Child
Tax Credit’s PovertyReducing Impact While
Doing Virtually Nothing to
Boost Parents’ Employment,
by Arloc Sherman, Chuck
Marr, and Stephanie
Hingtgen
September 23, 2021
Congressional Research Service
28
The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Study
Major Impact/Outcome Evaluated
Notes
Jain Family Institute,
Reducing Refundability of
the Child Tax Credit:
Assessing Poverty Impact
and Trade-offs, by Jack
Landry and Stephen
Nuñez
Child Poverty: Simulated estimates of
child poverty rates with and without full
refundability. Specifically, the authors
estimate child poverty rates with the
ARPA-expanded child credit and
compare them to child poverty rates
with the ARPA-expanded child credit
with the prior-law earned income
formula used to phase-in the credit for
low-income taxpayers. Estimates are
made using 2018 data and simulate the
impact in a nonrecessionary economy.
(Note that when simulating the ARPAexpanded child credit with the prior-law
earned income formula, the authors set
the maximum amount of the refundable
portion of the credit at 70% of the
maximum credit amount, as opposed to
the statutory amount of $1,400 per
child.)
“Treating the Biden [ARPA-expanded]
CTC as a baseline, limiting the
refundability of the CTC would increase
child poverty by 53 percent, leaving
behind 3.2 million children. The largest
impacts would fall on Black children,
increasing the Black child poverty rate by
83%.”
Child poverty: Simulated estimates of
child poverty rates of the ARPAexpanded child credit under different
assumptions about how many eligible
non-filing households receive the benefit.
“Our analysis conservatively estimates
that upwards of 6.4 million eligible
children will not receive the benefit,
resulting in an estimated child poverty
reduction of 11 to 18 percent, and a 92
percent take-up rate. We do not know
exactly who these children are, but we
find a substantial portion—at least 71
percent—receive other government
benefits, meaning that better data
sharing between state and federal
benefits agencies could offer a crucial
avenue for enrollment. Greater
enrollment could dramatically increase
the child poverty reduction, up to 40
percent.”
Food Insufficiency: Researchers
estimated the impact of the first monthly
CTC payment (i.e., the July payment) on
food insufficiency based on data from the
U.S. Census Bureau’s Pulse Survey. The
survey asks respondents: “In the last 7
days, which of these statements best
describes the food eaten in your
household?” Respondents who choose
the answers “Sometimes or often not
enough to eat” are considered to be
food insufficient.
Other Material Hardship
Indicators: Researchers also estimated
the impact the first monthly CTC
payment had on other hardship
indicators, including difficultly with paying
for usual household expenses and
whether the household is on time with
rent or mortgage payments (See Table 1
“Our findings offer three primary
conclusions regarding the initial effects of
the first monthly CTC payment
delivered mid-July 2021. First, the July
2021 CTC payment strongly reduced
food insufficiency among low-income
households with children; a $100
increase in CTC benefits (adjusted for
household-size) is associated with a 7percentage point, or roughly 25 percent,
decline in food insufficiency among lowincome families who report receipt of
the CTC. Second, the effects of the first
CTC payment on food insufficiency are
concentrated among households with
annual incomes of less than $35,000.
Third, increasing the coverage rate of
the CTC is critical for further reducing
material hardship.”
September 22, 2021
Jain Family Institute,
Assessing Non-filer Rates &
Poverty Impact for the
American Rescue Plan Act’s
Expanded CTC, by Jack
Landry and Stephen
Nuñez
September 8, 2021
Columbia’s Center on
Poverty and Social Policy,
The Initial Effects of the
Expanded Child Tax Credit
on Material Hardship, by
Zachary Parolin et al.
August 30, 2021
Congressional Research Service
29
The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Study
Major Impact/Outcome Evaluated
Notes
of the Columbia Center on Poverty and
Social Policy report).
Columbia’s Center on
Poverty and Social Policy,
Monthly Poverty Rates
Among Children after the
Expansion of the Child Tax
Credit, by Zachary Parolin
et al.
August 20, 2021
U.S. Census Bureau,
Economic Hardship
Declined in Households with
Children as Child Tax Credit
Payments Arrived, by
Daniel J. Perez-Lopex
August 11, 2021
Columbia’s Center on
Poverty and Social Policy,
The Benefits and Costs of a
U.S. Child Allowance, by
Irvin Garfinkel et al.
August 2, 2021, Revised
March 2022
Child poverty on a monthly basis:
Simulated estimates of child poverty
rates and number of children in poverty
using the Supplemental Poverty Measure
(SPM) in July 2021, after the first advance
payment of the child credit (July 2021).
These estimates are also provided by
race/ethnicity.
Primary estimates assume that about 60
million children live with taxpayers who
receive the credit, while the maximum
number of children who live in crediteligible households is estimated to be up
to 67 million. The authors also simulate a
range of monthly child poverty rates
under varying levels of CTC receipt
(providing estimates that range from
around 56 million to around 67 million
children receiving the benefit).
“The monthly child poverty rate fell
from 15.8 percent in June to 11.9
percent in July 2021.... This drop in child
poverty is primarily due to the first
payment of the expanded Child Tax
Credit, which on its own kept
approximately 3 million children from
poverty in July; without it, the monthly
child poverty rate would have been 4.1
percentage points (or 25.6 percent)
higher [i.e., would have been 15.9% in
July].”
Food Insufficiency: The percentage of
adults experiencing food insufficiency
(sometimes or often not having enough
to eat) before and after receipt of the
first advance child credit payments in July
2021.
Financial Hardship: The percentage of
adults having difficulty paying expenses
before and after receipt of the first
advance child credit payments in July
2021.
“The survey shows introduction of the
[advanced] CTC coincided with a drop
in food insufficiency in households with
children [from 11% to 8.4%]. It also
showed that in those households, there
was a drop in difficulty paying weekly
expenses [from 31.5% to 29.0%].”
Variety of Long-Term Outcomes
from Increased Family Income:
Estimates the current and future benefits
of an expanded child credit including
future earnings of child beneficiaries;
future tax payments of child
beneficiaries, neo-natal mortality,
children’s health and longevity, transfer
costs, expenditures on child protection,
crime, expenditures on children’s and
parents’ health, and parent tax payments.
“Our estimates indicate that making that
expansion permanent would cost $97
billion per year and generate social
benefits with net present value of $982
billion per year. Sensitivity analyses
indicate that our estimates are robust to
alternative assumptions.”
Congressional Research Service
30
The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Study
Major Impact/Outcome Evaluated
Notes
Urban Institute, How a
Permanent Expansion of the
Child Tax Credit Could
Affect Poverty, by Gregory
Acs and Kevin Werner
Child Poverty: Simulated child poverty
rates and the number of children in
poverty measured using the SPM during
a nonrecessionary economy (2018 data
used). Child poverty statistics broken
down by race/ethnicity, metropolitan and
nonmetropolitan areas, states, race, and
ethnicity.
Other Impacts: Information on
changes in family income is also
provided.
“Expanding the CTC would reduce child
poverty by 5.9 percentage points, from
14.2 to 8.4 percent (rounded to the
nearest tenth), using 2018 as a
benchmark for a typical year. That
means 4.3 million fewer children would
be in poverty in a typical year,
representing over a 40 percent decrease
in child poverty.”
Child Poverty: Simulated child poverty
rates measured using the SPM during a
nonrecessionary economy (2016-2018
data used). Child poverty rates are
broken down by race/ethnicity.
Other Impacts: Information on
poverty rates of individuals who live in
families with children, changes in family
income, and percentage of families
receiving the credit is also provided.
“CRS estimates that in a
nonrecessionary economy, the ARPA
expansion of the child credit will result
in nearly all families with children
including the lowest-income families with
children, receiving the child credit [from
84% of all families with children receiving
the credit before ARPA, to 96% after
ARPA].... the estimates also indicate that
the largest share of new recipients will
be the poorest families [from 52% of
poor families with children receiving the
credit before ARPA to 94% after ARPA].
CRS’s analysis indicates that the largest
increases in income are estimated to
occur among poor families with children,
substantially reducing the prevalence of
child poverty [i.e., the child poverty rate
is estimated to fall from 13% to 7%] and
the depth of poverty among families with
children [i.e., the poverty gap is
estimated to fall by 40%].”
Poverty: Number of people in 2021
lifted out of poverty by age using the
SPM (projected 2021 data). Estimates of
the impact of the advanced child credit
can be found in Table 6 of the Urban
report.
This study also estimates the poverty
impact of COVID-19 policies in
combination.
For this analysis, the Urban Institute
models only the benefits received in
2021—that is, the advance of the child
credit, which is one-half of the total
credit amount. This study finds that the
advanced child credit will lift 1.8 million
people out of poverty in 2021, of which
1 million are children (under 18 years
old); (see Table 6 of the Urban report).
July 29, 2021
Congressional Research
Service, The Child Tax
Credit: Impact of the
American Rescue Plan Act
(ARPA; P.L. 117-2)
Expansion on Income and
Poverty, by Margot
Crandall-Hollick, Jameson
Carter, and Conor Boyle
July 13, 2021
Urban Institute, 2021
Poverty Projections:
Assessing the Impact of
Benefits and Stimulus
Measures, by Laura
Wheaton, Linda
Giannerelli, and Ilhman
Dehry (This is an update
of a March 2021 analysis.)
July 2021
Congressional Research Service
31
The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Study
Major Impact/Outcome Evaluated
Notes
Center on Budget and
Policy Priorities (CBPP),
Congress Should Adopt
American Families Plan’s
Permanent Expansion of
Child Tax Credit and EITC,
Make Additional Provisions
Permanent, by Chuck
Marr et al.
Child Poverty: The simulated
reduction in child poverty rates
measured using the SPM during a
nonrecessionary economy (2016-2018
data used). Reductions in child poverty
rates are broken down by race/ethnicity
for each state.
Other Impacts: Number and
percentage of children (poor and
nonpoor) who would benefit is also
provided by race/ethnicity for each state.
“The full Families Plan’s Child Tax Credit
would lift an estimated 4.1 million
children above the poverty line, of
whom 1.6 million are Latino, 1.2 million
are white, 930,000 are Black, and
132,000 are Asian.... Of the roughly 9.9
million children it would lift above or
closer to the poverty line, 3.8 million are
Latino, 2.9 million are white, 2.1 million
are Black, and 426,000 are Asian. These
changes would reduce the number of
children in poverty by more than 40
percent nationally.”
Employment: Simulated estimates of
the impact of the ARPA-expanded child
credit on employment.
“We analyzed the impact of a permanent
CTC expansion on employment using
AEI’s Tax-Calculator along with an
employment model and set of
assumptions from the Congressional
Budget Office (CBO). According to our
calculation, the likely impact of the CTC
expansion on employment will be
296,000 full-time equivalent jobs lost (+/155,000). This is due to both the
elimination of the phase-in and the
phase-out of the larger benefit.”
May 24, 2021
American Enterprise
Institute (AEI), Unintended
consequences: Democrat’s
child tax credit will cost jobs,
by Alex Brill and Kyle
Pomerleau
April 22, 2021
Source: CRS.
II. Estimates of the Number of Children, Families, and Taxpayers
Receiving the ARPA-Expanded Child Credit
Children
By State
The Center on Budget and Policy Priorities (CBPP) has estimated the number of
children who would be affected by the permanent extension of the ARPAexpanded child credit: by state (Appendix Table 1) and by state and
race/ethnicity (Appendix Table 4). CBPP has also estimated the reduction in
child poverty by race and ethnicity from a permanent expansion of the ARPAexpanded child credit (Appendix Table 3).
CBPP also conducted a comparable analysis of the impact of the temporary
ARPA expansion of the child credit.
By Congressional District
Representative DeLauro’s office has provided estimates of the number of
children impacted by the ARPA-expanded child credit for selected congressional
districts (methodology can be found here).
Congressional Research Service
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Families
By State
The White House has provided state-specific fact sheets on receipt of tax credits
expanded by the American Rescue Plan Act, including estimates of the number of
families that have benefited from the expanded child credit.
CRS estimated the number of families eligible for the ARPA-expanded child
credit. Families may include more than one taxpayer. See CD1326941, StateLevel Estimates of Eligibility for the Expanded Child Tax Credit Included in the
American Rescue Plan Act of 2021 (ARPA; P.L. 117-2), by Conor F. Boyle,
Jameson A. Carter, and Margot L. Crandall-Hollick, available to congressional
clients upon request from the authors.
The Niskanen Center has also published estimates of the state-level impact of the
child credit (in addition, it has provided estimates by metropolitan and
nonmetropolitan areas in states, as well as national estimates by households’ race
and ethnicity). These accompany a report by the Niskanen Center on the
economic and community impact of the credit.
By Congressional District
The Niskanen Center has also published estimates of the county-level impact of
the expanded child credit. These accompany a report by the Niskanen Center on
the economic and community impact of the credit.
Taxpayers
The Tax Policy Center (TPC) has estimated the percentage of taxpayers who
benefit from the child tax credit in 2021 after the ARPA expansion, by income
level (Table T21-0044) and by income percentile (Table T21-0045) at the
national level. Note that TPC’s analysis is by “tax units” in which a tax unit is
everyone listed on an income tax return; includes filing and non-filing units. Tax
unit is generally used synonymously with the term taxpayer.
Estimates in Table T21-0044 can be compared to the benefit from the preARPA credit in 2021 in Table 21-0042 to estimate the impact of the ARPAexpanded credit by income level.
Estimates in Table 21-0045 can be compared to the benefit from the preARPA credit in 2021 in Table T21-0043 to estimate the impact of the ARPAexpanded credit by income percentile.
Treasury is providing data on the number of taxpayers receiving the advanced
payment of the credit by state as well as the total amount received by taxpayers
in each state. See “Treasury Data on Advance Payments” in Appendix C.
III. Estimates of How Families/Taxpayers Spent the Child Credit
Center for Law and Social Policy (CLASP) and partners: The Expanded
Child Tax Credit is Helping Families, But National Survey Shows Continued
Outreach Remains Essential, April 2022: “This October national survey
reached 1,012 families earning under $75,000 yearly and with children under 18
years old living in the household. Survey respondents were weighted statistically
Congressional Research Service
33
The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
to yield nationally representative results.... The key survey findings include: The
CTC monthly payments reached a wide majority of eligible parents. The monthly
CTC payments improved reported wellbeing for parents. Families – including
Black, Hispanic, and white respondents – are spending their monthly CTC
payments on necessities like food, rent, and clothing. The most common reasons
respondents reported for not receiving the monthly CTC were confusion or
opting for a lump-sum CTC refund at tax time. Very few families accessed the
IRS non-filer portal, and those who utilized the tool often reported confusion
when using it. Hispanic families, households with the lowest incomes, and
eligible taxpayers with lower educational attainment have higher barriers to claim
the expanded CTC compared to their counterparts.”
Bipartisan Policy Center (BPC): Accessing the Child Tax Credit: Insights
from American Parents, March 29, 2022: “BPC and Morning Consult
conducted a survey of 1,500 parents from February 17-22, 2022.... Nearly twothirds (63%) of parents who qualified for the CTC in 2021 said that the credit had
a large or somewhat large impact on their family’s finances. Low-income
parents, Black and Hispanic parents, younger parents, and parents in larger
households were particularly likely to report that the CTC had a large impact....
Most parents who received monthly payments of the CTC during the latter half
of 2021 reported spending the credit on basic expenses.... While awareness of the
CTC is high, administrative challenges prevent some parents from accessing it....
Notable income and racial disparities exist in current claim rates.... low-income
parents were more likely than their middle- or high-income counterparts to not
know if they qualified or report that they did not qualify, even though many of
these parents would have been eligible.”
Census: Household Pulse Survey CTC Use Landing Page: Data and
visualizations by state of the percentage of adults in households that received a
Child Tax Credit payment in the last four weeks who either mostly spent it or
used it to pay down debt.
Rapid Assessment of Pandemic Impact on Development-Early Childhood
(RAPID-EC) Project, December 2021: “Since the start of the advance Child Tax
Credit payments in July 2021, 76% of parents in our national survey report
having received the payments. We have been asking parents how they use these
payments and looking at how the payments are affecting families’ financial
situations and the emotional well-being of parents and children.... Over half
(55%) of families receiving the Child Tax Credit are using the payments to meet
basic needs (e.g., food, housing, utilities, and telecommunications). Fifty-two
percent are putting payments toward unpaid bills and other essentials (e.g.,
vehicle payments, credit card payments, child care); and child care accounts for
37% of the essential costs in this category. Additionally, 38% report putting
payments into savings for their children. Moreover, approximately one in five
parents who receive the Child Tax Credit payments report using them to pay for
household items (e.g., books, items for school, computer) (18%) and recreational
activities (e.g., a family outing, vacation, camp for child) (17%).... These
analyses are based on responses collected from 3,365 caregivers between the
dates of July 21st, 2021 and November 16th, 2021.... The RAPID-EC project
includes a survey of caregivers with children under age 6 and a survey of child
care providers and other adults who care for children under age 6.”
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Center for Law and Social Policy (CLASP), November 17, 2021: “The
national survey of 1,012 eligible families with children ages 0-17 living at home
was conducted by Ipsos, an international polling firm, with technical guidance
from researchers at the University of California, Berkeley. The survey was
distributed in the second and third weeks of October, after most eligible families
had received up to three rounds of monthly CTC advance payments.... The most
common way that respondents reported planning to use their CTC refund or
monthly payments was towards paying bills, food and groceries, paying their rent
or mortgage, buying clothing and shoes, and paying down credit cards or other
debt.”
Tax Policy Center, November 4, 2021: “In this brief, we use nationally
representative data from the US Census Bureau’s Household Pulse Survey
collected between July and September 2021 to examine receipt and use of the
advance CTC payments among adults living with children under 18, including
how these vary by race, ethnicity, and household income. About half of adults
(51 percent) reported spending the credit on food. The next most common
purchases included clothing (30 percent), utilities (29 percent), and schoolbooks
and supplies (25 percent).... Compared with adults with incomes of $75,000 or
more, adults with incomes below $75,000 were more likely to spend the credit on
food, clothing, utilities, schoolbooks and supplies, rent, and vehicle payments
and were less likely to save the credit.... Nearly 4 in 10 adults who received the
credit (39 percent) reported using it mostly to pay off debt, 3 in 10 (30 percent)
mostly spent it, and 3 in 10 (30 percent) mostly saved it.”
Census Bureau, October 26, 2021: “Three in 10 families that received monthly
Advance Child Tax Credit (CTC) payments spent them on kids’ school expenses,
and 1 in 4 families with young children used them to cover child care costs,
according to new results from the U.S. Census Bureau’s experimental Household
Pulse Survey (HPS).... The majority of HPS respondents reported spending their
CTC checks on more than one thing.”
American Enterprise Institute (AEI), October 18, 2021: “Overall, 62 percent
of parents in our sample (n=1,434) reported receiving the expanded CTC
payment, below the roughly 80 percent of households with children who were
eligible for the expanded payments. Less than half of these respondents said they
mostly spent their payments, although another 20 percent reported using it to pay
down debt. Parents in lower-income households were more likely to spend their
CTC payments, while higher-income households were more likely to save the
money.” The survey also asked respondents about the importance of the CTC
payments in meeting day-to-day expenses, the effect of receipt on employment,
and support for making the expanded credit permanent.
University of Michigan Ford School of Public Policy, October 2021: “To
understand more about how the expanded CTC is impacting families and inform
strategies to expand access to the credit, we partnered with Propel, the creators of
Providers (formerly Fresh EBT), a free mobile application that helps over 5
million families manage their Supplemental Nutrition Assistance Program
(SNAP) benefits. This brief discusses findings from two recent surveys with lowincome families who use the Providers application, many of whom are eligible
for the CTC. We found that while most respondents received the CTC and used it
to pay for essential household expenses, a substantial share of CTC-eligible
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
respondents did not receive their first two monthly payments, suggesting more
outreach and supports are needed to achieve universal receipt.”
U.S. Census Bureau, August 11, 2021: “Many HPS [Household Pulse Survey]
respondents reported spending their CTC payments on more than one thing.
About 47% reported spending it on food. Nearly 10% of adults in households that
received the CTC—and 17% of those with at least one child under age 5—spent
their CTC on child care.” More details can be found in the Detailed Tables: Child
Tax Credit Table.
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Appendix B. Congressional Resources
**Embedded hyperlinks in the appendices of this report are not visible in the PDF version of this
document. Please refer to the HTML version of this report available on crs.gov to view these
links.**
House Ways and Means Committee
Subcommittee on Oversight hearing with IRS Commissioner Rettig on the 2022
Filing Season, March 17, 2022
Ways and Means Committee, “One Year Stronger: Neal Hails Tax Cuts for
Families and Workers,” February 22, 2022
Subcommittee on Oversight hearing with the National Taxpayer Advocate on
Challenges Facing Taxpayers, February 8, 2022
Ways and Means Republicans, “Millions of American Families May Face
Surprise Tax Bills From Child Tax Credit,” January 31, 2022
Ways and Means Republicans, “Debunking Myths About the Child Tax Credit,”
December 13, 2021
Ways and Means roundtable, “Democrats’ Welfare Expansion Will Fail the Poor
and Threaten Jobs Recovery,” on October 20, 2021
Ways and Means Committee, “Markup of the Build Back Better Act,” September
9, 2021-September 15, 2021
One-pager on IRS child tax credit portals, June 10, 2021
Child tax credit portals FAQs, June 10, 2021
Subcommittee on Select Revenue Measures hearing, “Funding Our Nation’s
Priorities: Reforming the Tax Code’s Advantageous Treatment of the Wealthy,”
May 12, 2021
Subcommittee on Oversight hearing on the 2021 filing season, March 18, 2021
House Appropriations Committee
Subcommittee on Financial Services and General Government hearing on
Treasury Oversight, May 27, 2021
House Budget Committee
Full committee hearing, “Ensuring Women Can Thrive in a Post-Pandemic
Economy,” March 16, 2022
House Financial Services Committee
Full committee hearing, “The Inflation Equation: Corporate Profiteering, Supply
Chain Bottlenecks, and COVID-19,” March 8, 2022
Subcommittee on Consumer Protection and Financial Institutions hearing,
“Banking the Unbanked: Exploring Private and Public Efforts to Expand Access
to the Financial System,” July 21, 2021
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House Oversight and Reform Committee
Select Subcommittee on the Coronavirus Crisis hearing, “COVID Child Care
Challenges: Supporting Families and Caregivers,” March 2, 2022
Select Subcommittee on the Coronavirus Crisis hearing, “Reviewing Pandemic
Relief Programs and Charting an Economic Path Forward,” September 22, 2021
Senate Appropriations Committee
Subcommittee on Financial Services and General Government hearing on the
fiscal year 2023 budget request from the U.S. Internal Revenue Service, May 3,
2022
Senate Finance Committee
Full committee hearing, “Spotlighting IRS Customer Service Challenges,”
February 17, 2022
Full committee hearing on the President’s FY2022 budget, June 16, 2021
Full committee hearing on the IRS’s FY2022 budget, June 8, 2021
Full committee hearing, “Combating Inequality: The Tax Code and Racial,
Ethnic, and Gender Disparities,” April 20, 2021
Full committee hearing, “The 2021 Filing Season and 21st Century IRS,” April
13, 2021
Senate Banking, Housing, and Urban Affairs Committee
Full committee hearing, “The State of the American Economy: A Year of
Unprecedented Economic Growth and Future Plans,” February 17, 2022
Full committee hearing, “CARES Act Oversight of the Treasury and Federal
Reserve: Supporting an Equitable Pandemic Recovery,” September 28, 2021
Subcommittee on Financial Institutions and Consumer Protection hearing,
“Protecting Consumers from Financial Fraud and Scams in the Pandemic
Recovery Economy,” August 3, 2021
Full committee hearing, “American Rescue Plan: Shots in Arms and Money in
Pockets,” March 25, 2021
Joint Economic Committee
Report, “New Data and Studies Confirm the Enormous Economic Benefits
Provided by the Expanded Child Tax Credit,” April 14, 2022
Report, “Update: Six Months of Advance CTC Payments Have Dramatically
Reduced Childhood Poverty and Improved Family Finances,” December 14,
2021
Report, “Child Tax Credits Should Promote Work, Not Undermine It,” November
2, 2021
Hearing, “Building Back Better: Raising Revenue to Invest in Shared
Prosperity,” October 6, 2021
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Appendix C. IRS and Treasury Resources on the
ARPA-Expanded Child Credit for 2021
**Embedded hyperlinks in the appendices of this report are not visible in the PDF version of this
document. Please refer to the HTML version of this report available on crs.gov to view these
links.**
IRS Resources for Taxpayers
All information from the IRS on the child tax credit and the advance payments of
the child tax credit—including Frequently Asked Questions, Tax Tips, Outreach
Assistance, and news releases—can be found on the IRS resource page.
Non-filer Portal: Eligible non-filers can use the IRS Child Tax Credit Non-filer
Sign Up Tool to receive advance payments.62
Code for America, in partnership with the IRS and Treasury, has launched a
simplified portal at GetCTC.org (the portal works on mobile devices and is
also available in Spanish).63 Data on returns processed from this portal can be
found on the GetCTC Partner Dashboard.
Update Portal: Eligible taxpayers who want to update information with respect
to advance payments or opt out of advance payments can use the IRS Child Tax
Credit Update Portal.
Treasury Data on Advance Payments
Treasury has provided data on advance payments of the 2021 child credit by state:
Advance Child Tax Credit Payments Disbursed December 2021, by State
Advance Child Tax Credit Payments Disbursed November 2021, by State
Advance Child Tax Credit Payments Disbursed October 2021, by State
Advance Child Tax Credit Payments Disbursed September 2021, by State
Advance Child Tax Credit Payments Disbursed August 2021, by State
Advance Child Tax Credit Payments Disbursed July 2021, by State
Treasury Office of Tax Analysis (OTA) Studies
Treasury’s Office of Tax Analysis (OTA) has estimated the number of taxpayers
who would benefit from the child credit in 2022, under current law (i.e., the
ARPA changes expiring at the end of 2021), and under the Biden
Administration’s proposal (i.e., if the ARPA changes were in effect in 2022).
62 Links to all IRS tools for the advanced payment of the 2021 child credit can be found at https://www.irs.gov/credits-
deductions/advance-child-tax-credit-payments-in-2021.
63 See Chris Riotta, “Treasury taps Code for America for tax credit tool,” FCW, August 13, 2021, https://fcw.com/
articles/2021/08/13/getctc-code-for-america-treasury.aspx?m=1. “Wally Adeyemo, deputy secretary of the Treasury,
said in a statement on Friday the agency was working with Congress to create a permanent signup tool allowing
America’s most vulnerable families—those who do not earn enough income to file taxes annually—to access the
expanded CTC program. The administration said it would partner with the civic technology non-profit Code for
America to release an initial version of that platform in order to more quickly enroll new families.”
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
These analyses include estimates of the number of taxpayers that will benefit, the
total dollar amount of the benefit, and the average benefit per taxpayer broken
down by adjusted gross income (AGI). Detail on the Biden Administration
proposal can be found in the FY2022 Treasury Greenbook.
IRS National Taxpayer Advocate
Annual Report to Congress, 2021 includes assessments of the IRS’s
administration of the Advance Child Tax Credit (“AdvCTC”).
The IRS National Taxpayer Advocate published three blog posts in late August
2021 on the advanced monthly payments of the ARPA-expanded child credit.
“Advance Child Tax Credit: What You Should Know: Part I,” which
“addresse[s] ten things that individuals should know about the Advance
Child Tax Credit (AdvCTC)”;
“Advance Child Tax Credit: What You Should Know: Part II,” which
“focus[es] on issues experienced by taxpayers with Individual Taxpayer
Identification Numbers (ITINs) and the issuance of paper checks versus
direct deposits for the August payment”; and
“Advance Child Tax Credit: What You Should Know: Part III,” which
“explain(s) how AdvCTC tools work, including ID.me, and will discuss the
struggles some taxpayers are facing in receiving their AdvCTC.”
Treasury Inspector General for Tax Administration
Report, “The Child Tax Credit Update Portal Was Successfully Deployed, but
Security and Process Improvements Are Needed,” May 18, 2022
Report, “American Rescue Plan Act: Implementation of Premium Tax Credit Provisions,”
May 2, 2022
Report, “Results of the 2021 Filing Season,” March 9, 2022
Treasury and IRS Press Releases
IR-2022-105, May 6, 2022, “IRS provides guidance for residents of Puerto Rico
to claim the Child Tax Credit”
IR-2022-96, April 27, 2022, “IRS revises Tax Year 2021/Filing Season 2022
frequently asked questions for the Child Tax Credit”
IR-2022-53, March 8, 2022, “IRS revised 2021 Child Tax Credit and Advance
Child Tax Credit Payments frequently asked questions”
IR-2022-22, February 1, 2022, “IRS revises FAQs for 2021 Child Tax Credit and
Advance Child Tax Credit Payments”
Treasury press release jy0590, February 8, 2022, “Treasury Janet L. Yellen at the
White House Child Tax Credit and Earned Income Tax Credit Day of Action”
Treasury press release jy0567, January 24, 2022, “Treasury and the White House
Announce New ChildTaxCredit.gov to Help Families Access the Full Child Tax
Credit”
IR-2022-10, January 11, 2022, “IRS updates FAQs for 2021 Child Tax Credit and
Advance Child Tax Credit Payments”
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
IR-2021-255, December 22, 2021, “IRS issues information letters to Advance
Child Tax Credit recipients and recipients of the third round of Economic Impact
Payments; taxpayers should hold onto letters to help the 2022 Filing Season
experience”
IR-2021-249, December 15, 2021, “Families will soon receive their December
advance Child tax Credit payment; those not receiving payments may claim any
missed payments on the upcoming 2021 tax return”
Treasury press release jy0533, December 15, 2021, “Treasury and IRS Disburse
Sixth Monthly Child Tax Credit to Families of 61 Million Children”
IR 2021-243, December 7, 2021, “Get ready for taxes: What’s new and what to
consider when filing in 2022”
IR-2021-235, November 23, 2021, “Child Tax Credit payments: IRS online
portal now available in Spanish; Nov. 29 is last day for families to opt out or
make other changes”
Treasury press release jy0482, November 15, 2021, “Treasury and IRS Disburse
Fifth Month of Advance Child Tax Credit Payments”
IR-2021-222, November 12, 2021, “IRS: Families will soon receive November
advance Child Tax Credit payments; time running out to sign up online to get an
advance payment in December”
IR 2021-218, November 9, 2021, “IRS updates 2021 Child Tax Credit and
Advance Child Tax Credit Payments Frequently Asked Questions”
IR-2021-211, October 29, 2021, “Child Tax Credit: Families with income
changes must enter them in IRS online portal on Monday to impact Nov. 15
payment; Spanish version coming in late November”
IR-2021-201, October 15, 2021, “IRS: Families now receiving October Child Tax
Credit payments; still time for eligible families to sign up for advance payments”
Treasury press release jy0411, October 15, 2021, “Treasury and IRS Disburse
Fourth Month of Advance Child Tax Credit Payments”
IR-2021-188, September 15, 2021, “IRS: Families now receiving September
Child Tax Credit payments”
Treasury readout jy0341, September 1, 2021, “Readout: Treasury, White House,
and Code for America Host Call to Discuss Collaboration and Launch of New
Bilingual and Mobile-Friendly Sign-Up Tool for Advance Child Credit”IR-2021171, August 20, 2021, “Child Tax Credit: New update address feature available
with IRS online portal; make other changes by August 30 for September
payment”
IR-2021-169, August 13, 2021, “IRS: Families now receiving August Child Tax
Credit payments; still time for low-income families to sign up”
Treasury press release jy0322, August 13, 2021, “Treasury and IRS Disburse
Second Month of Advance Child Tax Credit Payments”
IR-2021-156, July 21, 2021, “IRS holds additional weekend events July 23-24 to
help people with Child Tax Credit payments and Economic Impact Payments”
IR-2021-153, July 15, 2021, “IRS: Monthly Child Tax Credit payments begin”
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Treasury press release jy0274, July 15, 2021, “Treasury and IRS Announce
Families of Nearly 60 Million Children Receive $15 Billion in First Payments of
Expanded and Newly Advanceable Child Tax Credit”
IR-2021-150, July 12, 2021, “IRS: Online Child Tax Credit eligibility tool now
available in Spanish; other multi-lingual materials help families see if they
qualify for advance payments”
IR-2021-146, July 7, 2021, “IRS holds special weekend events to help people
who don’t normally file taxes get Child Tax Credit payments and Economic
Impact Payments”
IR-2021-143, June 30, 2021, “IRS: Families receiving monthly Child Tax Credit
payments can now update their direct deposit information”
IR-2021-133, June 24, 2021, “IRS online tool helps families see if they qualify
for the Child Tax Credit; one of three tools now available for the upcoming
advance payments”
IR-2021-132, June 23, 2021, “IRS and community partners team up to provide
free tax help for families to get advance Child Tax Credit payments and
Economic Impact Payments”
IR-2021-130, June 22, 2021, “IRS announces two new online tools to help
families manage Child Tax Credit payments”
IR-2021-129, June 14, 2021, “IRS unveils online tool to help low-income
families register for monthly Child Tax Credit payments”
Treasury press release jy0227, June 14, 2021, “Treasury and IRS Announce New
Online Tool to Help Families Register for Monthly Child Tax Credit”
IR-2021-124, June 7, 2021, “IRS sending letters to more than 36 million families
who may qualify for monthly Child Tax Credits; payments start July 15”
IR-2021-116, May 19, 2021, “IRS urges groups to share information to help
those without permanent addresses get benefits including Economic Impact
Payments, upcoming advance Child Tax Credit”
IR-2021-113, May 17, 2021, “IRS, Treasury announce families of 88 percent of
children in the U.S. to automatically receive monthly payment of refundable
Child Tax Credit”
Treasury press release jy0177, May 17, 2021, “Treasury and IRS Announce
Families of 88% of Children in the U.S. to Automatically Receive Monthly
Payment of Refundable Child Tax Credit”
IR-2021-106, May 11, 2021, “IRS offers overview of tax provisions in American
Rescue Plan; retroactive tax benefits help many people now preparing 2020
returns”
Treasury press release jy0069, March 18, 2021, “FACT SHEET: The American
Rescue Plan Will Deliver Immediate Economic Relief to Families”
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Appendix D. Steps to Reconcile Excess Advance
Payments of the Child Credit Due to an Incorrect
Number of Qualifying Children
Table D-1 outlines the steps a taxpayer would take to reconcile any excess advance payments of
the child credit with the credit they are eligible to claim on their 2021 income tax return. In
addition, Table D-1 provides an illustration of how the safe harbor would work. ARPA provides a
safe harbor in cases where a taxpayer receives excess payments due to a difference in the number
of children between the data used to estimate and advance the credit (generally 2020 tax data) and
the number of children they claim on their 2021 tax return. In cases where excess payments are
due to large changes in income between 2020 and 2021, changes in marital status, or changes in
principal place of abode, no safe harbor applies.
Table D-1. Steps for Reconciling Advance Payments of the Child Credit with the
Actual Credit on 2021 Income Tax Returns
For Excess Payments That Occur Due to an Incorrect Number of Qualifying Children
Example 1
Single parent with 2 qualifying young
children in 2020 and 1 young child/0
older children in 2021
Example 2
Single parent with 2 qualifying young
children in 2020 and 0 qualifying
children in 2021
Step 1: Determine “excess”
credit.
For example: If the taxpayer’s income
is under $112,500 (in 2020 and 2021),
then:
For example: If the taxpayer’s income
is under $112,500 (in 2020 and 2021),
then:
A. Calculate the total credit the
taxpayer is eligible for on their
2021 return.
A. Total 2021 credit: $3,600
A. Total 2021 credit: $0
B. Calculate the total amount they
were advanced in 2021 (based on
2020 information).
B. Total amount advanced: $3,600
(50% of $7,200)
B. Total amount advanced: $3,600
(50% of $7,200)
C. Subtract the advance (B) from
the total they are actually eligible
for (A). Negative sign indicates
excess credit. Positive sign indicates
additional amount to be claimed with
return. Note that throughout the
remainder of the table, excess credit
will be displayed as a positive
number for ease of calculations.
C. Excess credit: $0 (=$3,600-$3,600)
C. Excess credit: -$3,600 (=$0$3,600)
If B is greater than A, the taxpayer
will have received an excess credit
(the difference between A and B). In
cases where the taxpayer has
received an excess credit, the
taxpayer may need to repay some or
all of the excess (continue on to the
steps below).
The difference between the actual credit
they are eligible for in 2021 and the
advanced credit is $0. The taxpayer will
effectively not receive a credit when they
file their 2021 return, because they
already received it as the advanced
credit.
Steps to Reconcile
Excess Advance Payments of
the 2021 Child Credit
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Step 2. Determine maximum
safe harbor amount.
Not applicable, no excess payment.
A. Determine net difference
between (i) Number of qualifying
children used to determine
advanced credit and (ii) number
eligible for actual credit in 2021.
A. The net difference between (i) the
number of qualifying children from a
2020 tax return (2 children) used to
determine the advanced credit and
(ii) the number of children claimed on
a 2021 tax return (0 children) is 2
children.
B. Multiply (A) by $2,000.
B. 2 𝑐ℎ𝑖𝑙𝑑𝑟𝑒𝑛 𝑥 $2,000 = $𝟒, 𝟎𝟎𝟎
Step 3: Phaseout maximum
safe harbor, if applicable.
Depending on income and filing
status in 2021, the maximum safe
harbor may be subject to
reduction.
Not applicable, no excess payment.
No phaseout: If 2021 income is
less than or equal to the following
thresholds, the safe harbor is not
reduced.
$40,000 single filersa
$50,000 head of household filers
$60,000 married joint filersb
No phaseout: If a single person in
2021 (i.e., single filer in 2021) has
income of $40,000 or less, their safe
harbor is not reduced (i.e., it equals
the maximum safe harbor amount).
Phaseout: The safe harbor is
reduced ratably (i.e.,
proportionally) if 2021 income is
between
$40,000-$80,000
single filersa
$50,000-$100,000
head of household filers
$60,000-$120,000
married joint filersb
Phaseout: If a single person in 2021
has income between $40,000 and
$80,000, the maximum safe harbor
phases out ratably in relation to
income in the phaseout range. For
example, if income were $60,000 in
2021, the maximum safe harbor
would be reduced by:
No safe harbor if 2021 income is
greater than or equal to
$80,000 single filersa
$100,000 head of household filers
$120,000 married joint filersb
No safe harbor: If a single person in
2021 has $80,000 or more in income,
their safe harbor amount is $0.
Congressional Research Service
$60,000−$40,000
[
$80,000−$40,000
]=50%
A $4,000 safe harbor reduced by 50%
would equal $2,000.
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Step 4: Calculate the amount
of any excess credit that
needs to be recaptured (or
paid back) on 2021 tax
return:
Subtract the safe harbor amount
(determined after step 3) from
the total amount of excess credit
(determined in step 1) in 2021.
If the safe harbor amount is
greater than or equal to excess
payment, none of the advanced
amount needs to be paid back.
Not applicable, no excess payment.
If income in 2021 for a single person
is:
Under $44,000: Payback amount is $0
since the excess credit of $3,600 is
less than the $4,000 safe harbor
when income is $40,000 or less.
Between $40,000 and $44,000 the
safe harbor gradually declines but is
still greater than or equal to $3,600.
$44,000+: Payback amount equals
$3,600 excess credit minus safe
harbor until income is $80,000 or
more, at which point the total excess
credit of $3,600 needs to be repaid.
If income was $60,000, the safe harbor
would be $2,000, the single person
would need to pay back $3,600-$2,000
or $1,600 with their 2021 tax return.
If income was $80,000 or more, the
safe harbor would be $0, the single
person would need to pay back all
$3,600 in excess credit with their 2021
return.
Source: CRS analysis of P.L. 117-2.
Notes: Assumes advanced payment that would be received in 2021 would be based on 2020 income and family
structure (number of qualifying children and marital status). Broadly, income is assumed to be the same between
2020 and 2021 to isolate the impact of a changing number of qualifying children.
a. This includes married taxpayers who file separately.
b. This includes taxpayers who file as surviving spouses.
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The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Appendix E. The Child Credit and Residents of
U.S. Territories
Below is a summary comparing child credit receipt among residents of the territories, before
ARPA, in 2021 under current law as amended by ARPA, and after 2021 under current law as
amended by ARPA.
Table E-1. Child Tax Credit for Residents of the Territories
Post 2021
Under Current Law
(as amended by ARPA)
2021 Under Prior Law
(Before ARPA)
2021 Under Current Law
(as amended by ARPA)
Puerto
Rico (PR)
PR did not have a child credit
under its own internal revenue
laws.
PR residents with three or
more qualifying children
received the ACTC under the
alternative formula.a Under
this formula, the ACTC
effectively equaled 7.65% of
earned income up to the
maximum ACTC of $1,400
per qualifying child. Residents
with fewer than three
qualifying children did not
receive the ACTC.
PR residents with three or
more children claimed the
federal ACTC amount by filing
a return with the IRS directly.
They did not receive the
ACTC via their territorial tax
system.
PR does not have a child
credit under its own internal
revenue laws.
PR residents are eligible for
the fully refundable ARPAexpanded child credit (up to
$3,600 per young child or up
to $3,000 per older child).
PR residents will claim the
total 2021 federal credit
amount by filing a 2021 return
with the IRS directly.b The
federal advance payment
program of the ARPAexpanded credit does not
apply to PR residents.
PR does not have a child
credit under its own internal
revenue laws.
PR residents will be eligible for
the ACTC using the
alternative formula. The priorlaw limitation of the
alternative formula to only
families with three or more
children is eliminated.
Effectively, PR residents are
eligible for a credit equal to
7.65% of earned income up to
the maximum ACTC per child.
From 2022-2025 the
maximum is $1,400 per
qualifying child. Beginning in
2026, the maximum amount of
the ACTC is $1,000 per
qualifying child.
PR residents will claim the
federal ACTC amount by filing
a return with the IRS directly.
American
Samoa
(AS)
AS appears to have a child
credit under its own internal
revenue laws that reflects the
parameters of the federal child
credit in effect in 2000. (In
2000, the child credit was
$500 per qualifying child and
refundable for families with
three of more children under
the alternative formula.)
However, it is unclear in
practical terms precisely how
and to what extent residents
of American Samoa received
the child credit under their
own territorial tax system.c
Available information suggests
that residents with three or
more children received the
ACTC as calculated under the
If AS has a plan approved by
the Treasury Secretary to
distribute the ARPA-expanded
child credit amounts to its
residents, Treasury is directed
to cover the total cost of the
ARPA-expanded child credit
as if American Samoa had a
mirror-code tax system. In
addition, if AS chooses to
provide advance payments of
the 2021 credit in a manner
similar to the federal program
to advance the 2021 credit,
Treasury will provide an
additional $300,000 for
administrative costs.
If no such plan is established
and approved, AS residents
can apply for the ARPA-
If AS has a plan approved by
the Treasury Secretary to
distribute child credit amounts
to its residents, Treasury is
directed to cover the total cost
of child credit—the refundable
portion (i.e., the ACTC) and
nonrefundable portion—as if
American Samoa had a mirrorcode tax system. From 2022
to 2025, the maximum child
credit amounts are $2,000 per
child, of which $1,400 may be
received as the refundable
portion of the credit (i.e., the
ACTC). From 2026 and
thereafter, the amounts are
$1,000 per qualifying child, of
which $1,000 per qualifying
child may be received as the
ACTC. For these purposes,
Territory
Congressional Research Service
46
The Expanded Child Tax Credit for 2021: Frequently Asked Questions (FAQs)
Territory
MirrorCode
Territories
(CNMI,
Guam,
USVI).
Post 2021
Under Current Law
(as amended by ARPA)
2021 Under Prior Law
(Before ARPA)
2021 Under Current Law
(as amended by ARPA)
alternative formula. The IRS
Chief Financial Officer (IRSCFO) covered the costs of the
ACTC under the alternative
formula by making an
aggregate payment to the
territorial government. The
exact manner and timing in
which the territorial
government then made direct
payments to its residents is
unclear.d
expanded credit by filing a tax
return directly with the IRS,
like residents of PR.
the ACTC may be calculated
under the earned income
formula, which is generally
more generous than the
alternative formula.e
If no such plan is established
and approved, AS residents
can apply directly with the IRS
for the ACTC calculated
under the alternative formula,
like residents of PR. In this
case, the prior-law limitation
of the alternative formula to
only families with three or
more qualifying children does
not apply (i.e., the same
treatment as residents of
Puerto Rico).
Mirror-code territories by
definition have a child tax
credit identical to the federal
child tax credit in their own
territorial tax code. Hence,
residents of mirror-code
territories may be eligible for
a child credit identical to the
credit in the Internal Revenue
Code (IRC). However, it is
unclear in practical terms
whether and to what extent
residents of mirror-code
territories actually receive a
credit under their own
territorial tax laws.f
Available information suggests
that residents with three or
more children received the
ACTC under the alternative
formula. The IRS-CFO
covered the total cost of the
ACTC under the alternative
formula by making aggregate
payments to the territorial
governments. The exact
manner and timing in which
the territorial governments
then made direct payments to
their residents is unclear.
Mirror-code territories by
definition have a child tax
credit identical to the federal
child tax credit in their own
territorial tax code.
Residents of mirror-code
territories are eligible for the
fully refundable ARPAexpanded child credit (up to
$3,600 per young child or
$3,000 per older child).
Residents of the mirror-code
territories will claim the
benefit on their territorial tax
return. The law directs
Treasury to cover the total
cost of the ARPA-expanded
child credit as paid out by
territorial governments
In addition, if a mirror-code
territory chooses to provide
advance payments of the 2021
credit in a manner similar to
the federal program to
advance the credit, Treasury
will provide an additional
$300,000 for administrative
costs.
Mirror-code territories by
definition have a child tax
credit identical to the federal
child tax credit in
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