Beginning with tax year 2021
The Child Tax Credit has increased to $3,000 for children age 6 to 17 or $3,600 for children under age 6. The credit is fully refundable which means it will increase your refund or reduce your tax liability by this same amount.
Prior to 2021
The Child Tax Credit was worth $2,000 per qualifying child. The credit was first used to reduce your tax. If you had no tax liability, up to $1,400 may be refunded to you as long as you had earned a minimum of $2,500 during the taxable year. The refundable amount was equal to 15% of your earned income over $2,500, up to $1,400 and is referred to as the Additional Child Tax Credit.
To estimate how much of the refund you would receive, you can use the following equation:
(Your salary – 2,500) x .15
The credit eventually phases out for married taxpayers filing jointly with an income of $400,000 ($200,000 for all other taxpayers).
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