Up to date for tax yr 2021
The Baby Tax Credit score (CTC) underwent some hefty adjustments in 2021:
- Max credit score quantity: The credit score’s most quantity elevated from the unique $2,000 per youngster to as much as $3,000 per qualifying youngster age 6-17 and as much as $3,600 for youngsters ages 5 and below in 2021.
- Baby’s age: Kids ages 17 and below can qualify for the credit score in tax yr 2021 whereas beforehand the qualifying age was capped at 16.
- Refundability: The CTC is absolutely refundable in 2021, which means you’ll be able to declare the complete quantity as a tax refund even for those who don’t owe any revenue tax.
- Advance month-to-month funds: Mother and father of qualifying kids might obtain half of their Baby 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 revenue restrict: You do not want to have earned revenue in 2021 to qualify for this tax credit score.
- Earnings phaseout threshold: The credit score quantity you qualify for begins lowering as soon as your adjusted gross revenue 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 complete CTC for those who owed much less revenue tax than the credit score quantity, however you possibly can qualify to declare the Further Baby Tax Credit score (ACTC). The ACTC is a $1,400 refundable credit score, so in earlier years, taxpayers might take the tax break even when they didn’t have any tax legal responsibility — or if the quantity they owed was low.
Issues look a bit completely different this yr after the IRS expanded the common Baby Tax Credit score advantages, making the CTC absolutely refundable and eliminating the minimal revenue necessities. Nevertheless, the $1,400 ACTC restrict nonetheless sometimes continues to use to People residing overseas. In case your fundamental house was positioned outdoors the U.S. in 2021, you’ll be able to nonetheless declare the refundable Further Baby Tax Credit score.
The CTC continues to find out your eligibility for the ACTC. Should you don’t qualify for the CTC, you’ll be able to’t take the ACTC.
