What is this Advanced Child Tax Credit? Is it the same as the Stimulus Checks? Absolutely not. This money is money that you, as a parent, were going to get anyway when you filed your 2021 tax return in early 2022. $3600 per child up to age 5, $3000 for children ages 6 – 17. The IRS is just giving out half of these amounts ($1800 or $1500) in monthly payments July – Dec 2021 ($300 or $250). This amount will be SUBTRACTED from the credit refund amount you’ll get upon filing your tax return.
Key Features of the Child Tax Credit
- Eligibility:
- Age Requirement: The child must be under the age of 17 at the end of the tax year.
- Relationship: The child must be your son, daughter, stepchild, foster child, sibling, stepsibling, or a descendant of any of these.
- Residency: The child must live with you for more than half of the year.
- Support: You must provide more than half of the child’s financial support.
- Dependent Status: The child must be claimed as a dependent on your tax return.
- Credit Amount:
- For tax year 2023, the maximum credit is up to $2,000 per qualifying child.
- Up to $1,400 of this amount can be refundable, which means you can receive it as a refund even if you don’t owe any federal income tax.
- Income Limits:
- The credit begins to phase out at higher income levels. For single filers, the phase-out begins at $200,000, and for married couples filing jointly, it starts at $400,000.
- Refundability:
- The refundable portion of the CTC is known as the Additional Child Tax Credit (ACTC). This can provide a refund even if your tax liability is reduced to zero.
- Claiming the Credit:
- To claim the CTC, you must fill out Form 1040 or 1040A and attach Schedule 8812 if you are claiming the refundable portion.
Recent Changes and Enhancements
In response to the COVID-19 pandemic, the American Rescue Plan Act of 2021 temporarily expanded the Child Tax Credit for the tax year 2021:
- Increased Credit Amount: The maximum credit was increased to $3,600 for children under 6 and $3,000 for children ages 6 to 17.
- Full Refundability: The credit was made fully refundable for the tax year 2021.
- Advance Payments: Eligible families received monthly advance payments of half the estimated annual credit from July to December 2021.
These changes applied only for the tax year 2021. As of 2023, the CTC has reverted to its previous structure with a maximum of $2,000 per child.
For more detailed information, refer to the IRS Child Tax Credit page and the U.S. Department of the Treasury resources.
