The Internal Revenue Service reminded families today that some taxpayers who claim at least one child as their dependent on their tax return may not realize they could be eligible to benefit from the Child Tax Credit (CTC).
Eligible taxpayers who received advance Child Tax Credit payments last year should file a 2021 tax return to receive the second half of the credit. Eligible taxpayers who did not receive advance Child Tax Credit payments last year can claim the full credit by filing a 2021 tax return.
The IRS urges grandparents, foster parents or people caring for siblings or other relatives to check their eligibility to receive the 2021 Child Tax Credit. It’s important for people who might qualify for this credit to review the eligibility rules to make sure they still qualify. Taxpayers can use the Interactive Tax Assistant to check eligibility. Taxpayers who haven’t qualified in the past should also check because they may now be able to claim the credit. To receive it, eligible individuals must file a 2021 federal tax return.
What Is the Child Tax Credit Expansion?
The Child Tax Credit expansion, which is a part of the American Rescue Plan, increased the amount of money per child families can receive and expanded who can receive the payments.
The American Rescue Plan increased the Child Tax Credit from $2,000 to $3,600 per child for children under the age of six, from $2,000 to $3,000 for children at least age 6 and raised the age limit from 16 to 17 years old.
The American Rescue Plan Act of 2021 expanded the Child Tax Credit for the tax year of 2021 only.
Who Qualifies for the Child Tax Credit?
Taxpayers can claim the Child Tax Credit for each qualifying child who has a Social Security number that is valid for employment in the United States and issued by the Social Security Administration before the due date of their tax return (including an extension if the extension was requested by the due date).
To be a qualifying child for the 2021 tax year, the dependent generally must:
- Be under age of 18 at the end of the year.
- Be their son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister or a descendant of one of these (for example, a grandchild, niece, or nephew).
- Provide no more than half of their own financial support during the year.
- Have lived with the taxpayer for more than half the year.
- Be properly claimed as their dependent on their tax return.
- Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid.
- Have been a U.S. citizen, U.S. national or U.S. resident alien.
What Are the Eligibility Factors?
Individuals qualify for the full amount of the 2021 Child Tax Credit for each qualifying child if they meet all eligibility factors and their annual income is not more than:
- $150,000 if they’re married and filing a joint return, or if they’re filing as a qualifying widow or widower.
- $112,500 if they’re filing as a head of household.
- $75,000 if they’re a single filer or are married and filing a separate return.
Parents and guardians with higher incomes may be eligible to claim a partial credit. Claiming these benefits can result in tax refunds for many individuals. Individuals should file electronically and choose direct deposit to avoid delays and receive their refund faster.
If you didn’t receive the above credits, reach out to your local tax professional at Meadville Tax Service at firstname.lastname@example.org or by calling 814-333-2488.