What is the Child Tax Credit and how does it affect tax filing?
The Child Tax Credit helps families cover some of the cost of raising a child, lowering families tax burden or even putting some money in your pocket.
Raising a family can be expensive so the US government gives American families a chance to reduce their tax burden through different tax provisions. The child tax credit is one that families can claim for each of their children when they file a tax return.
Congress is currently working on expanding this credit to be fully refundable and reach lower-income families for the 2021 calendar year. In its current form eligible families can claim a $2,000 credit, $1,400 of which is fully refundable for children under the age of 17. For families with older dependents there is also a non-refundable $500 credit.
The Child Tax Credit
The current Child Tax Credit is worth up to $2,000 per qualifying child and $500 per qualifying dependent. The credit begins to phase out when adjusted gross income reaches $200,000 for single filers and $400,000 for married couples filing jointly. But there is also an income floor of $2,500 in minimum income.
The refundable amount is equal to 15% of your earned income over $2,500, up to the maximum $1,400 refundable credit, so if you owe less tax than the credit you will receive the remainder of the credit as part of your refund. However, the $500 per qualifying dependent is not refundable, so it only reduces your tax burden and is not added to your refund.
Get to know the #IRS requirements for those who can be claimed as a dependent on your tax return. HINT: Never claim your puppy as a qualifying child. https://t.co/KVVtSZJEC0 pic.twitter.com/3BQyeU7lUY— IRSnews (@IRSnews) February 28, 2021
Eligibility to claim the Child Tax Credit
For the $2000 CTC the child must be:
- under 17 on 31 December
- be a U.S. citizen, resident, or national, and
- have a Social Security number which you must provide on your tax return.
- live with you for over half the year
- provide less than half of his or her own support
A qualifying child can be any of the following: your son, daughter, stepchild, adopted child, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them—for example, your grandchild, niece, or nephew.
The IRS has an online questionnaire you can complete to determine if you have a qualifying child. Visit the Is My Child a Qualifying Child for the Child Tax Credit? page at the IRS website.
For the $500 credit the qualifying dependent is:
- A child ages 17–18
- or 19–24 and in school full time in at least five months of the year.
- Also included are older dependents
The IRS has an online questionnaire you can complete to determine if you have a qualifying dependent. Visit the Whom May I Claim as a Dependent? page at the IRS website.
When filing you taxes you can use a number of Free File programs through the IRS with tax preparers. Most of these tax software systems will lead you through the process and calculate the credits for you.
Te recomendamos en English
- OLYMPIC GAMES USA at Tokyo Olympics 2021 live updates: medal count, athletes and results, today 23 July
- OLYMPIC GAMES Tokyo Olympics 2021 volleyball and beach volleyball schedule: dates, times, groups
- OLYMPIC GAMES | SWIMMING Tokyo Olympics 2021: Team USA's swimming schedule - dates, times, strokes, events
- OLYMPIC GAMES | SWIMMING What are Katie Ledecky's stats: records, Olympic medals, titles
- OLYMPIC GAMES What are the differences between indoor volleyball and beach volleyball in the Olympics?
- OLYMPIC GAMES | SOFTBALL AND BASEBALL Which sports were pulled from the 2012 and 2016 Olympics and are returning in Tokyo 2021?