Ben Hill County Department of Family and Children's Services
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What is the child tax credit?
The child tax credit, or CTC, is an annual tax credit available to taxpayers with qualifying dependent children. It was first introduced as part of the Taxpayer Relief Act of 1997 and has played an of import part in providing financial support for American taxpayers with children.
The taxation credit — ordinarily upwardly to $ii,000 per qualifying dependent — was expanded to a maximum of $3,600 in 2021 equally function of the American Rescue Plan (the coronavirus relief bundle that took event in March). And, for the first time in U.South. history, many taxpayers also received one-half of the credit as advance monthly payments from July through Dec of 2021.
Nerdy tip: By the end of January, all recipients of the advance child taxation credit payments should receive Letter of the alphabet 6419, which will provide a breakdown of all the advance payments disbursed to yous. The IRS has asked taxpayers to apply the letter to reconcile the credit on their 2021 returns. If you suspect your Letter 6419 states an inaccurate accelerate payment total, the IRS advises visiting your IRS online business relationship for the most upwards-to-date information.
Who qualifies for the child tax credit?
For the 2021 tax year, you can take total advantage of the expanded credit if your modified adjusted gross income is under $75,000 for single filers, $112,500 for heads of household, and $150,000 for those married filing jointly.
The credit begins to phase out above those thresholds.
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First phaseout: Income exceeds the in a higher place thresholds merely is below $400,000 (married filing jointly) or $200,000 (all other filing statuses) . Your total credit per child tin be reduced by $50 for each $i,000 (or a fraction thereof). This phaseout will not reduce your credit below $2,000 per child.
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Second phaseout: Income exceeds $400,000 (married filing jointly) or $200,000 (other filing statuses) . The phaseout will continue docking $50 per each $ane,000 and begin to reduce your credit per kid below $2,000. You may be disqualified from the credit altogether.
Some of the other eligibility requirements for the child tax credit include:
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You lot must have provided at to the lowest degree half of the child'south support during the last year, and the child must have lived with you for at least one-half the year (there are some exceptions to this dominion; the IRS has the details here ).
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The kid cannot file a joint tax return.
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Yous must have lived in the U.S. for more than than half the yr (or, if filing jointly, one spouse must have had a main habitation in the U.S. for more than one-half the year).
How much y'all tin get per kid
For the 2021 taxation year, the kid tax credit offers:
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Up to $3,000 per qualifying dependent child 17 or younger on Dec. 31, 2021.
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Upward to $3,600 per qualifying dependent kid under half-dozen on Dec. 31, 2021.
If yous took reward of the advance payments, the IRS nigh probable sent half of the credit in the form of monthly payments from July through December of 2021. Those with qualifying dependents 17 or younger might have received upward to $250 monthly per qualifying dependent and those with children 5 or younger might have received up to $300 monthly per qualifying dependent.
How the child tax credit will affect your taxes
For the 2021 tax year, the CTC is fully refundable — that is, it can reduce your tax beak on a dollar-for-dollar footing, and you might be able to go a tax refund check for annihilation left over. How much of the credit you claim on your 2021 return volition depend on whether you opted in for advance payments, how much you lot received as an advance, also as your tax-filing circumstances.
If y'all received accelerate payments
Letter 6419 contains a detailed summary of the money you received from the advance CTC payments. Information technology also confirms the number of qualifying dependents the IRS used to calculate those advance payments. This data will help you to reconcile the credit when you file your return.
If you opted out of accelerate payments
If you lot opted out of the advance payments before the commencement i was disbursed in July, claiming the credit on your return will likely be much simpler. When yous file, you'll simply confirm that yous're eligible for the credit and then claim the full amount you're entitled to based on your 2021 income and number of qualifying dependents.
If you lot don't ordinarily file taxes
Low-income families who may not normally file a tax return had the choice to sign up for advance payments using the IRS'south not-filers sign-up tool. To claim the balance (or the full credit if y'all didn't receive the advance payments), you lot'll need to file a return this twelvemonth.
Will you have to pay back the child taxation credit?
First, some adept news. The child tax credit is not considered taxable income. Information technology's a credit, which ways it can lower your revenue enhancement neb or potentially consequence in a refund. However, things become a little tricky if it turns out that you were overpaid on your accelerate payment.
The advance payments were a prepayment of the 2021 revenue enhancement credit you would normally claim in total during filing season. But because one-half of the credit was sent out early on, the IRS likely used your most recent tax render (2020 or older) to determine how much of an advance to send you lot each month. So, if your financial or personal circumstances (such as your filing condition, income, custody arrangements or residency status) have inverse in 2021, there's a take chances y'all might accept received more of an advance than you're really eligible for. A few ways this could play out:
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Let's say you received advance payments totaling $i,500 for your qualifying dependent based on your 2020 income. However, your income has increased significantly in 2021, making yous eligible just for a reduced credit. The excess paid out to you is considered an overpayment.
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Some other case: You're a single filer with one dependent who lived in the U.Due south. in 2020. The IRS and then sent y'all advance payments based on that information, which yous accustomed. All the same, in 2021, you really lived outside of the U.S. for more than than one-half the year, making yous ineligible for the child tax credit. Accepting the payment would also exist considered an overpayment.
If it turns out that you were given more of an advance than you were eligible for, y'all'll demand to report information technology as additional income taxation to the IRS on your 2021 return. That additional income taxation volition either reduce your refund or potentially increase your tax bill.
Some people who were overpaid may besides be eligible for repayment protection, meaning they won't need to repay the IRS. You can learn more about who qualifies on the IRS website . If you're unsure how to reconcile your credit or believe you may have been overpaid, quality taxation software or working with a professional revenue enhancement preparer can assistance you to reconcile your credit before the revenue enhancement-filing deadline .
Frequently asked questions
I had a baby in 2021. Am I eligible for the CTC?
Yes. Parents of newborns in 2021 are eligible for the kid tax credit. Y'all can claim the credit when you file your 2021 return.
The child tax credit update portal shows that a payment was issued, merely I didn't receive it. What steps do I have?
If the child tax credit update portal and your IRS online account show that you were issued a payment that yous did not actually receive, y'all can call the IRS to written report the missing payment and asking a trace at 800-908-4184 (seven am to 7 pm local fourth dimension).
The agency urges yous to have the following data on hand when you call: the payment appointment, payment method, condition, and the amount listed in the CTC update portal.
If the IRS determines that the payment was not received by you or returned to the bureau, the IRS will update its records, and those who are eligible can merits the missing amount on their 2021 return.
Are the advance kid revenue enhancement credit payments permanent?
No. Legislation to extend the enhanced credit amount and accelerate payment construction has not been passed. For now, the kid tax credit for the 2022 tax twelvemonth will revert back to its original max of $2,000 per qualifying dependent.
Is the kid tax credit taxable?
No, the kid tax credit is not considered income and therefore is not taxable. However, if the IRS overpaid you (i.eastward., the amount you received is more than than yous tin claim), you may need to reconcile the overpayment on your 2021 tax return.
I had a baby in 2021. Am I eligible for the CTC?
Yes. Parents of newborns in 2021 are eligible for the child revenue enhancement credit. You can merits the credit when you file your 2021 return.
The child tax credit update portal shows that a payment was issued, but I didn't receive it. What steps do I take?
If the child tax credit update portal and your IRS online account testify that yous were issued a payment that you did not really receive, you can call the IRS to report the missing payment and request a trace at 800-908-4184 (7 am to 7 pm local time).
The agency urges you to take the following information on hand when you call: the payment date, payment method, status, and the amount listed in the CTC update portal.
If the IRS determines that the payment was not received by you or returned to the agency, the IRS will update its records, and those who are eligible can claim the missing corporeality on their 2021 render.
Are the advance child tax credit payments permanent?
No. Legislation to extend the enhanced credit amount and advance payment structure has not been passed. For now, the child taxation credit for the 2022 tax year will revert dorsum to its original max of $2,000 per qualifying dependent.
Is the child tax credit taxable?
No, the child tax credit is not considered income and therefore is non taxable. However, if the IRS overpaid y'all (i.e., the amount you received is more than yous can merits), you may need to reconcile the overpayment on your 2021 tax return.
Estimate your child tax credit amount
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Source: https://www.nerdwallet.com/article/taxes/qualify-child-child-care-tax-credit
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