Baby Tax Credit score Boosted for Puerto Rico Households in 2021

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Ever because the U.S. first launched the Baby Tax Credit score (CTC) in 1997, Puerto Rican residents with taxable revenue have been eligible to say funds for his or her youngsters — however there was a catch.

In earlier years, households in Puerto Rico additionally wanted to have no less than three youngsters to qualify for the credit score. This restriction made solely roughly 11 p.c of the inhabitants in Puerto Rico eligible to say the CTC in years previous.

However, due to the American Rescue Plan launched in March of final yr, these necessities have been lifted for 2021. Right here’s what Puerto Rican households must find out about claiming the Baby Tax Credit score this yr.

Who qualifies for the CTC in Puerto Rico in 2021?

All Puerto Rican residents with no less than one qualifying little one who lived in Puerto Rico for no less than half the yr in 2021 can declare the Baby Tax Credit score this yr. The credit score is absolutely refundable, which implies Puerto Rican households don’t want taxable revenue to say the fee.

Many residents of Puerto Rico qualify to say the Baby Tax Credit score in 2021, however they have to file a Kind 1040-SS to say their fee.

How is that this totally different from final yr?

Beforehand, most Puerto Rican residents had been ineligible for the CTC funds as a result of a restriction requiring Puerto Rican households to have no less than three youngsters and to have taxable revenue.

This yr, households in Puerto Rico can declare the improved most credit score of as much as $3,000 for qualifying youngsters ages 6-17 or $3,600 for kids ages 5 and below. No taxable revenue is required to obtain these CTC funds.

How is that this totally different from US residents?

Households in Puerto Rico can now declare the identical CTC as households inside the U.S. The primary distinction is that the advance Baby Tax Credit score funds weren’t provided to most Puerto Rican residents in 2021. As a substitute, households will now be claiming their full Baby Tax Credit score fee as they might a tax refund, in a single lump sum.

How can Puerto Rican residents declare the Baby Tax Credit score?

If you’re a resident of Puerto Rico with out taxable revenue (which means you aren’t required to fill out a U.S. revenue tax return), that you must file Kind 1040-SS with the IRS to say your further Baby Tax Credit score funds.

To make this course of as handy as potential for Puerto Rican residents, TaxAct® has created a useful on-line portal to assist households who qualify for these expanded funds.

How lengthy will the expanded CTC be out there in Puerto Rico?

The American Rescue Plan solely ensures this enhanced CTC for Puerto Rican households by means of the 2021 tax yr presently; nonetheless, there was dialogue between lawmakers to doubtlessly prolong the credit score by means of 2025.

 

All TaxAct presents, merchandise, articles and providers are topic to relevant phrases and situations.

 

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