Up to date for tax 12 months 2021
The Youngster Tax Credit score (CTC) underwent some hefty modifications in 2021:
- Max credit score quantity: The credit score’s most quantity elevated from the unique $2,000 per little one to as much as $3,000 per qualifying little one age 6-17 and as much as $3,600 for kids ages 5 and underneath in 2021.
- Youngster’s age: Youngsters ages 17 and underneath can qualify for the credit score in tax 12 months 2021 whereas beforehand the qualifying age was capped at 16.
- Refundability: The CTC is totally refundable in 2021, which means you possibly can declare the total quantity as a tax refund even in the event you don’t owe any earnings tax.
- Advance month-to-month funds: Dad and mom of qualifying youngsters may obtain half of their Youngster Tax Credit score in six advance month-to-month installments in 2021, then declare the rest of their credit score when submitting their 2021 tax return.
- No minimal earnings restrict: You don’t want to have earned earnings in 2021 to qualify for this tax credit score.
- Earnings phaseout threshold: The credit score quantity you qualify for begins reducing as soon as your adjusted gross earnings hits a sure threshold: $75,000 for single filers, $150,000 for joint filers, and $112,500 for head-of-household filers.
CTC vs. ACTC in 2021
Earlier than 2021, you couldn’t take the total CTC in the event you owed much less earnings tax than the credit score quantity, however you might qualify to declare the Further Youngster Tax Credit score (ACTC). The ACTC is a $1,400 refundable credit score, so in earlier years, taxpayers may take the tax break even when they didn’t have any tax legal responsibility — or if the quantity they owed was low.
Issues look just a little completely different this 12 months after the IRS expanded the common Youngster Tax Credit score advantages, making the CTC totally refundable and eliminating the minimal earnings necessities. Nonetheless, the $1,400 ACTC restrict nonetheless sometimes continues to use to People residing overseas. In case your essential dwelling was positioned outdoors the U.S. in 2021, you possibly can nonetheless declare the refundable Further Youngster Tax Credit score.
The CTC continues to find out your eligibility for the ACTC. If you happen to don’t qualify for the CTC, you possibly can’t take the ACTC.