Who Qualifies for the Child Tax Credit and What It Means This Tax Season

If you are eligible and have not opted out, you likely received child tax credit advance payments in 2021.

Sarah Tew/CNET

Each tax season brings its own changes and adjustments, and 2022 is no different. A big difference for 2021 tax returns is the expansion child tax creditwhich will increase tax refunds for many families this year.

If you have children and are preparing your tax returns, you will need to know the details of this year’s child tax credit in order to file your taxes correctly and maximize the amount of your tax refund.

This year’s improved child tax credit results from the passage of the American Rescue Act last March. The legislation increased the amount of money credited to families from $2,000 per child to $3,600 for children under age 6 and $3,000 for children up to age 17 (previous limit was 16). ). The change also makes the entire credit refundable, instead of 70%.

The expansion of the child tax credit has also introduced monthly advance payments. Half of the money – up to $300 per month per child – was distributed to eligible families who did not opt ​​out using the IRS Child Tax Credit Portal in 2021.

Most families with children 17 and under are eligible for the Child Tax Credit. Read on to find out how to find out if you’re eligible, how to calculate your tax credit, and how prepayments in 2021 will affect your tax refund this year.

Are you eligible for the child tax credit?

More … than 96% of families with children 17 and under are eligible for the child tax credit. Theirs’ interactive eligibility wizard allows families to quickly find out if they are eligible by responding to a a few quick questions.

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Your IRS tax records page will show the child tax credit prepayment amount.

Screenshot IRS.com

The IRS offers several other online tools for your taxes this year, but the most useful ones require a online account with the IRS who uses facial recognition via ID.me for registration. Once your application is confirmed, you will have access to many of your tax records, including information about your child tax credit and advance payments in 2021.

From IRS Account Home page, click “View Tax Records” in the Records section. You’ll land on a page that shows your most recent tax return, your child tax credit advance payments for 2021, and your stimulus payments (called “economic impact payments”) for the year.

Parents who received child tax credit advance payments should also have received IRS Letter 6419 confirming the amount of payments and the number of eligible children. You can use the tax records from your IRS account online to confirm that your letter is correct.

Does my income affect my child tax credit?

Your adjusted gross income (AGI) can change the amount of your child tax credit. If you earn $75,000 or less filing individually, or $150,000 or less as a married spouse, you will receive the maximum child tax credit – $3,600 for children 6 and under, $3,000 for children up to 17 years old.

For every $20 of AGI above these limits, the child tax credit is reduced by $1 until the amount reaches $2,000. The child tax credit remains at $2,000 for single filers earning between $107,000 and $200,000 and married filers earning between $182,000 and $400,000. The credit starts to decrease again at the same level above these amounts, giving a credit of $0 for those who earn $240,000 and more filing individually or $440,000 married filing jointly.

Simplify calculations using CNET Child Tax Credit Calculator to determine the amount of your child tax credit.


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What if I had a new child in 2021?

If you had a new baby in 2021 or brought a new eligible child into your family, they are certainly eligible to be included in the child tax credit when you file your taxes this year. Add their information to IRS Form 1040 and check the box labeled “eligible for child tax credit”. Then include them with your number of eligible children on IRS Form 8812.

An important note: In addition to being 17 or younger, children must have valid Social Security numbers in order to be eligible for the Child Tax Credit.

How do I account for installments on my 2021 tax return?

The IRS issued a long explanation on how to manage your child tax credit advance payments when filing your 2021 tax return. We’ll break it down to make it easier:

These steps will help you “reconcile” your child tax credit and get the remaining half of the money you didn’t receive up front.

If you elected not to receive advance child tax credit payments, you will still need to complete Form 8812 to claim your credit. You will simply not enter any amount for prepayments on line 14f. You will receive the full amount of your Eligible Child Tax Credit with your 2021 tax refund.

What happens if I received too much money in advance of child tax credit payments?

Although unlikely, if your income changed dramatically in 2021 or your family situation changed the number of eligible children living with you last year, the IRS may have sent you too much money. ahead of child tax credit payments. So do you have to pay that money back?

In typical IRS terms, “maybeIt all depends on your AGI and your eligibility for “reimbursement protection” from the extra funds they received through child tax credit advance payments.

Refund protection is phased out as income increases, to a maximum of $80,000 for single filers, $100,000 for heads of household filing, and $120,000 for married filers jointly. If you have earned more than these limits, yes, you must repay the full amount of additional Child Advance Tax Credit you received. This doesn’t necessarily mean you won’t get a refund – your refund may just be reduced by that extra Child Tax Credit money.

For those who earn between the maximum and minimum amounts for refund protection, they will have to repay some of the extra money. The exact percentage of money to be refunded can be calculated using the formula shown in question H7 on the IRA FAQ on reconciling your advance child tax credits.