The Advanced Child Tax Credit Explained

The Advanced Child Tax Credit (often called the ACTC or advance CTC) is money the federal government sends to your bank account or mails to your home each month if you have children under 17. You do not have to wait until tax time to receive it — the IRS sends payments throughout the year based on information from your previous tax return.

The credit itself is part of the regular Child Tax Credit, which lets you reduce the taxes you owe when you file your return. The "advanced" part means the IRS estimates how much of that credit you will be due and sends it to you in monthly installments instead of waiting for you to claim it on your tax form.

The amount you receive each month depends on your household income from the previous year and the number of may have access to children. In recent years, the monthly payment has been up to $250 per child ages 6 to 16, and up to $300 per child under 6, though Congress can change these amounts.

Key Takeaways

  • The Advanced Child Tax Credit sends you monthly payments throughout the year if you have children under 17, rather than waiting until you file your taxes.
  • The amount you receive is based on your previous year's income and the number of children who meet the requirements, and it reduces what you owe when you file your return.
  • You must have filed a tax return in the previous year for the IRS to send you advance payments, and your income must fall below certain thresholds that vary by filing status.
  • If you receive more in advance payments than you are actually due, you may owe money back when you file your tax return, so keeping records of what you received is important.
  • You can log into the IRS Child Tax Credit Update Portal to see how much the IRS thinks you will receive and to update your income or number of children if your situation changed.

Who Can Receive the Advanced Child Tax Credit

To receive advance payments, you must have filed a federal income tax return in the previous year. The IRS uses that return to find your address, confirm you have children, and calculate your income. If you did not file a return, you will not automatically receive payments, though you may be able to provide information another way.

Your income must be below a certain limit. For the 2023 tax year, that limit was $400,000 for married couples filing jointly, $200,000 for single filers, and $300,000 for heads of household. These thresholds change slightly each year. If your income is above the limit, you do not receive advance payments, though you may still be able to claim part of the credit when you file your return.

Each child must be under 17 at the end of the tax year, have a valid Social Security number, be claimed as your dependent on your tax return, and be a U.S. citizen, national, or resident alien. Grandchildren, nieces, nephews, and other relatives can count if they meet these requirements and you claim them as dependents.

How Much You Receive and When

The IRS divides the total Child Tax Credit into monthly payments and sends them to you between July and December (or January through December in some years, depending on what Congress decides). Most payments arrive on the 15th of the month, though the exact date can shift slightly.

The payment amount depends on your income. If your income is below $150,000 (for married couples filing jointly), you receive the full amount per child. As your income rises above that threshold, the credit shrinks by $50 for every $1,000 of income over the limit. This means higher-income families receive smaller monthly payments or none at all.

You can receive the payment by direct deposit to your bank account, by check mailed to your address, or by debit card, depending on how you received your tax refund in the previous year. The IRS uses the same method unless you change it through the Child Tax Credit Update Portal.

What Happens When You File Your Tax Return

When you file your tax return the following spring, you report all the advance payments you received. The IRS then calculates the total Child Tax Credit you are actually due based on your final income for that year and your final number of may have access to children.

If the advance payments you received are less than the credit you are due, the IRS sends you the difference as part of your refund. If you received more in advance payments than you are due, you owe the difference back — though there are limits on how much you have to repay if your income was below $400,000 for married couples or $200,000 for single filers.

This is why it matters to keep track of how much you received each month. The IRS will send you a letter in January showing the total advance payments for the previous year, and you will need that number when you file your return.

Updating Your Information During the Year

If your situation changes — your income drops, you have another child, your address changes, or you are no longer a U.S. resident — you can update the IRS through the Child Tax Credit Update Portal on the IRS website. You will need your Social Security number and date of birth to log in.

Updating your income is especially important if you earned significantly less in the current year than you did in the previous year. If the IRS is basing your payments on last year's higher income, you may be receiving more than you will actually be due, which means you will owe money back at tax time. Updating your income can lower your monthly payments now and prevent that surprise bill later.

You can also use the portal to opt out of advance payments entirely if you prefer to claim the full credit on your tax return instead of receiving monthly payments. Some people choose this option if their income is unstable or if they want to manage the money themselves.

Common Mistakes and What to Watch For

One frequent mistake is not updating your address with the IRS if you move. If your address changes and the IRS does not know, your payments may go to your old home and you will miss them. Update your address through the Child Tax Credit Update Portal or by filing a change-of-address form with the post office.

Another mistake is not reporting a change in your number of children. If you had a baby or adopted a child during the year, you can add them to your advance payments by updating the portal. If you do not, you will miss out on payments you are due for that child.

Some people also forget to report the advance payments they received when they file their tax return. Even if you received the payments, you must report them on your return. Failing to do so can delay your refund or trigger an IRS notice.

The Difference Between the Child Tax Credit and Other Credits

The Child Tax Credit is separate from the Earned Income Tax Credit (EITC), which is a different credit for lower-income working families. You can receive both if you meet the requirements for each. The EITC does not have an advance payment option — you claim it only when you file your return.

The Child Tax Credit is also different from child support or child care subsidies. The credit is a tax benefit that reduces what you owe the IRS, while child support is a court-ordered payment from one parent to another, and child care subsidies help pay for daycare or preschool. These are separate programs with different rules.

Frequently Asked Questions

Do I have to pay back the advance payments if my income went up?

If your income rose above the threshold during the year, you may owe back some or all of the advance payments when you file your return. However, if your income stayed below $400,000 (married filing jointly) or $200,000 (single), there is a limit on how much you have to repay — you cannot owe back more than a certain amount that depends on your filing status and number of children.

What if I did not file a tax return last year?

You will not automatically receive advance payments. However, you may be able to provide information to the IRS another way through the Non-Filer Sign-Up tool on the IRS website, which lets you register your children and income without filing a full return. Check the IRS website for current options.

Can I get the advance payments if I am self-employed?

Yes, as long as you filed a tax return in the previous year and your income is below the threshold. Self-employed income counts the same way as W-2 wages. You will report your advance payments on your tax return just like any other filer.

What if the IRS has the wrong number of children?

Log into the Child Tax Credit Update Portal and add or remove children as needed. You will need their Social Security numbers and dates of birth. The IRS will adjust your future monthly payments based on the update.

Can I choose to receive the money as a lump sum instead of monthly payments?

No, the IRS sends the advance payments in monthly installments. However, you can opt out of advance payments entirely through the Child Tax Credit Update Portal and claim the full credit on your tax return instead, which gives you the money all at once when you file.