Beginning in 2022:
The child tax credit is reverting to the previously used non-refundable credit of up to $2,000 which may reduce your tax liability for each qualifying child listed on your return. Of this $2,000, $1,500 may qualify as a refundable credit (Additional Child Tax credit). The age limit also reverts back to under 17.
Tax Year 2021 only:
- Increases from $2,000 to $3,000 for kids ages 6-17
- Increases the amount from $2,000 to $3,600 for kids under 6 years old
- Will be fully refundable
- Raises the age limit to include 17-year-olds
Where do I report the payments?
- Federal Section
- Deductions
- Credits
- Child Tax Credit Form 8812
How do I know the amount of advance payments I've received?
If you received advance Child Tax Credit payments from the IRS, Form 6419 will be delivered to you by mail. Form 6419 will detail the amount of Child Tax Credit payments you received in advance.
Who is considered a Qualifying Child?
A qualifying child for purposes of the child tax credit is a child who meets all the following:
- The individual is the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, a grandchild, niece, or nephew).
- The individual does not provide more than one-half of his or her own support during 2021.
- The individual lives with the taxpayer for more than one-half of tax year 2021.
- The individual is properly claimed as the taxpayer’s dependent.
- The individual does not file a joint return with the individual’s spouse for tax year 2021 or files it only to claim a refund of withheld income tax or estimated tax paid.
- The individual was a U.S. citizen, U.S. national, or U.S. resident alien.
Is there an income limit?
The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI found on line 11 of the 2020 1040 Form ) of:
- $75,000 or less for singles,
- $112,500 or less for heads of household, and
- $150,000 or less for married couples filing a joint return and qualified widows and widowers.
Households that earn more than the amounts listed above may still qualify for a reduced Child Tax Credit.
How is the Child Tax Credit reduced if I make more than the amount allowed?
The Child Tax Credit phases out in two different steps based on your modified adjusted gross income (AGI) in 2021.
Step One
The first phaseout can reduce the Child Tax Credit to $2,000 per child.
- The first phaseout step can reduce only the $1,600 increase for qualifying children ages 5 and under, and the $1,000 increase for qualifying children ages 6 through 17, at the end of 2021.
- For every additional $1,000 in modified Adjusted Gross income (AGI) over the limit, the credit will be reduced by $50.
Step Two
The second phaseout can reduce the remaining Child Tax Credit below $2,000 per child.
- The Child Tax Credit won’t begin to be reduced below $2,000 per child until your modified AGI in 2021 exceeds:
- $400,000 if married and filing a joint return; or
- $200,000 for all other filing statuses.
- The second phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.
What information is used to calculate the credit?
The IRS will base the credit on the 2020 tax return. If the 2020 return has not yet been filed or processed yet, the IRS will use the 2019 return to determine the credit instead.
If I have a baby in 2021, will I receive the new credit?
Anyone who has a child under 6 at the end of 2021 will qualify for $3,600 as long as they are not phased out by the income limits. The IRS is opening a portal for you to update your family size to include newborns.
How much will the payment be?
According to the IRS, qualifying taxpayers that are eligible to receive the advance Child tax Credit payments for their families will receive a personalized letter providing an estimate of how much their payment will be.
The payment will be up to $300 per month for each qualifying child under age 6 and up to $250 per month for each qualifying child ages 6 to 17.
When will I get my payment?
The IRS will issue advance Child Tax Credit payments on July 15, August 13, September 15, October 15, November 15 and December 15.
How will I receive my payment?
Eligible families will begin receiving advance payments, either by direct deposit or check. You can update your banking information on the IRS website.
Can I opt out of receiving the credit in advance?
The IRS is currently working on the Child Tax Credit Update Portal. This portal will allow taxpayers that have been determined to be eligible for the advance payments to opt out. The IRS will eventually update the portal to also allow taxpayers to check the status of the payments and update their information. More details will be released as the IRS updates their website.
For more information on the child tax credit for 2021, please refer to Form 8812 instructions.
For tax years 2020 and prior:
The Child Tax Credit is a partially refundable credit offered by the IRS that may reduce your tax liability by as much as $2,000 for each of your qualifying children. Of the $2,000, $1,400 qualifies as a refundable credit.
For example, if you qualify to receive $2,000 in Child Tax Credit but your tax liability is only $300, the Child Tax Credit can reduce your $300 tax liability to $0. Of the remaining $1,700, only $1,400 may be refunded to you as an Additional Child Tax Credit.
Unlike the Child Tax Credit, the Additional Child Tax Credit is calculated off your earned income. You must have an earned income amount of at least $2,500 in order to receive the Additional Child Tax Credit.
How do I figure the amount of my credit?
Both the Child Tax Credit and Additional Child Tax Credit are automatically calculated within your account based on the information provided in your return. To determine if you have received either of these credits, from within your My Account screen, select the "Summary" tab from the navigation bar followed by "Show Details" next to Tax and Credits (for Child Tax Credit) and Payments (for Additional Child Tax Credit).
What if my child does not qualify?
If your dependent is older than 17 or does not yet have an SSN, you may be eligible for the Other Dependent Credit.
Where is the Child Tax Credit reported on my 2021 return?
The child tax credit is reported on line 28 of the 1040 Form since it is refundable for most people this year.. The calculations for the amount reported on line 28 are on Form 8812, Line 14i (US Residents) or 15h (Non US residents).
Other Dependents
Dependents who do not qualify for the Child Tax Credit are reported on Form 8812, Line 14h (US residents) or Line 15g (non US residents). This amount is pulled to line 19 of the 1040 Form.
Why do I have to pay back the advance Child Tax Credit Payments?
If you do not qualify for the advanced Child Tax Credit payments based on your dependents or income amount, you may need to pay all or a portion of the payments back. The excess you received is reported on Form 8812, Line 29 and is based on your entries in the program. The total amount you are required to repay is listed on Form 8812, line 40.
If you have questions about Repayment Protection, please see our KB article.
For additional information on each credit, please refer to IRS Publication 972.