2021 Child Tax Credit: What You Need To Know

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The 2021 Child Tax Credit is a credit for parents or guardians that can be claimed to reduce tax bills. So what exactly does the Child Tax Credit do and how does it impact you?

Am I Eligible?

In order to claim the Child Tax Credit:

  • You must be the parent or guardian of the child/children you wish to claim.

  • The child must have resided with you for at least 6 months out of the year.

Amount will be adjusted based on income.

  • For the 2020 tax year

    • For married filing jointly, if modified adjusted gross income is under $400,000

    • For other filiers, if modified adjusted gross income is under $200,000

  • For the 2021 tax year

    • For single filers, modified adjusted gross income under $75,000

    • For maried filing jointly, modified adjusted gross income under $150,000

    • For head of household filers, modified adjusted gross income under $112,500

How Much Might I Receive?

The amount of available Child Tax Credit is based on child’s age.

  • Parents/Guardians could receive up to $3,600 per child for children under 6 years old on December 31, 2021

  • Parents/Guardians could receive up to $3,000 per child for children 17 or younger on December 31, 2021

  • For older children, parents/guardians could receive up to $500 per child 17 or 18 years old

  • For children ages 19 to 24 that are enrolled full time in college, parents/guardians could receive up to $500

Amount is refundable. This means that it can be used to reduce your 2021 tax bill to zero and you could receive a tax refund check for any remaining funds.

When Will I Receive My Child Tax Credit?

There are choices on how to receive your 2021 Child Tax Credit amount.

  • Claim 100% of the 2021 Child Tax Credit on your 2021 taxes (tax return that is due in April 2022)

    • U.S. Treasury is setting up online portal to opt out of the monthly payment plan if planning to claim 100% on 2021 taxes.

  • Get 50% of the 2021 Child Tax Credit now and claim the other 50% on your 2021 taxes.

    • 50% will be split into 6 monthly direct deposits from July through December 2021

    • Other 50% will be claimed on 2021 taxes

    • IRS will use most recent tax return to determine eligibility and to see ages of children for the 2021 tax year to calculate monthly payments.

For more information on the Child Tax Credit, check out the below links.

5 Things You Should Know About the Child Tax Credit

How to Qualify & How Much It Is

Information on Child Care Act provided by:

Gonzalez, O. & DeNisco Rayome, A. (2021). $3,600 Child Tax Credit for 2021 FAQ: 5 things you should know. cnet. https://www.cnet.com/personal-finance/3600-child-tax-credit-for-2021-when-will-parents-get-their-money-5-things-you-should-know/

Oren, T. & Paden, R. (2021). Child Tax Credit 2021: How to qualify & how much it is. Nerdwallet. https://www.nerdwallet.com/article/taxes/qualify-child-child-care-tax-credit

Jessica Petty