Child Tax Credit
IRS Child
Tax Credit
Claiming children or dependents on your tax return can have many benefits. Here are 10 dependent tax breaks to consider when preparing your taxes:
Claiming the Child Tax Credit
Important: the advance payments of the Child Tax Credits and the enhanced amount was for 2021 only and you can not claim this on any other tax return. Earned income is required to claim the refundable portion of the Child Tax Credit; in other words, you cannot file a non-filer return to claim the Child Tax Credit.
When you prepare your tax return on eFile.com, we will automatically check to see if you qualify for the Child Tax Credit. If you qualify for the credit, the exact amount will be calculated for you and filled out on the Form 8812 in order to get your maximum credit amount.
If you have a qualifying child at the age of 16 or younger as of December 31 of the tax year, you may be able to claim the Child Tax Credit. Part of the Child Tax Credit can be refundable, so it may give you a tax refund even if you don't owe taxes. The qualifying child or children must have a social security number or SSN issued by the Social Security Administration before the tax return or tax extension due date - typically, April 15. See steps to take to obtain an SSN.
Here are some important facts about the Child Tax Credit:
- The Child Tax Credit is intended to offset the many expenses of raising children and can be worth as much as $2,000 per child; the refundable maximum could be up to $1,600, equal to 15% of earned income above $2,500.
- If your tax is $0 and your total earned income is at least $2,500, you can claim the refundable part of the credit - see the Additional Child Tax Credit section below.
- The Child Tax Credit begins to phase out (decrease in value) at an adjusted gross income of $200,000 for Single or at $400,000 for Married Filing Jointly.
- When figuring your income for the purposes of the Child Tax Credit, you must include any foreign income exclusions - this is calculated for you on eFile.com.
- Refer to the Child Tax Credit and Credit for Other Dependents Publication 972 for more details or contact one of our Taxperts® if you have specific questions.
Use the eFile.com CHILDucator or Child Tax Credit calculator below to help you find out if you are eligible to claim the Child Tax Credit on your next tax return:
Find out if your child qualifies you for the Child Tax Credit!
To qualify for the Child Tax Credit, you must have a child or dependent who meets all of the following requirements:
- Age: The child must have been 16 or younger on December 31 of the tax year, excluding 2021.
- Citizenship: The child must be a United States citizen, a United States national, or a resident alien.
- Dependent: The child must be claimed as a dependent on your tax return. See the free eFile.com DEPENDucator if you are not sure if someone qualifies as a dependent.
- Relationship: The child must be related to you in one of the following ways: son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister, grandchild, niece, or nephew. This includes any legally adopted child, any child lawfully placed with you in preparation for adoption, and any foster child lawfully placed in your care.
- Residency: The child must have lived with you for more than half of the year (stayed with you for at least 183 nights). Temporary absences for special circumstances are generally acceptable and special rules may apply if you are divorced or for other certain circumstances.
- Support: The child must NOT have provided more than half of his or her own financial support for the year.
Rather than worry about how much of the credit you qualify for, let the eFile platform do the work for you. Report your tax figures, income, and some information about your dependent(s) and the app will determine how much of the credit you qualify for. Sign up for an eFile.com account here so you can prepare and e-file your tax return now.
Additional Child Tax Credit
The Additional Child Tax Credit or ACTC is a refundable credit that you may receive if your Child Tax Credit is greater than the total amount of income taxes you owe, as long as you had an earned income of at least $2,500. This refundable portion can be worth up to $1,600.
Important: If you qualify and claim the Additional Child Tax Credit on a tax return, you might get a refund even if you do not owe any tax.
Schedule 8812, Additional Child Tax Credit, is the outputted form that the eFile Tax App will generate when you file your taxes with eFile.com. It is used to determine if you qualify for the credit and to calculate the amount of the credit you will receive. eFile.com will do all required math and generate the form for you when you prepare your return. Schedule 8812 will be used for the nonrefundable Child Tax Credit, Additional CTC, and the Credit for Other Dependents - eFileIT.
The CTC is a partially refundable tax credit; this means that some of the credit is nonrefundable while some is refundable and the amounts will be reported in two separate sections of your return. A nonrefundable credit means that the credit cannot be used to increase your tax refund or to create a tax refund when you don’t already have one. Refundable tax credits, on the other hand, are treated as dollar-for-dollar payment directly to you. When the total of these credits is greater than the tax you owe, the IRS sends you a tax refund for the difference. See more details on refundable and nonrefundable tax credits.
Only one taxpayer (or married couple filing jointly) may claim any one child for the purposes of the Child Tax Credit and the Additional Child Tax Credit. If a child is claimed as a dependent on more than one tax return, the IRS will determine who gets the claim according to a set of tiebreaker rules. See details on dependent claiming disputes.
Child-Related Tax Savings
Here are other ways you can save taxes on raising children:
- Child and Dependent Care Credit: You may be able to claim up to $3,000 for one dependent or up to $6,000 for two or more dependents with the Child and Dependent Care Tax Credit. The credit amount is up to 35% of your expenses, so a maximum credit of $2,100 can be claimed. Note: for 2021 only, these figures were increased and you may have been able to report $8,000 for one dependent or $16,000 for two or more and receive up to 50% of this amount as a credit; a maximum credit of $8,000 (50% of $16,000).
- Adoption Tax Credit: If you adopted a child, or if you are in the process of adopting a child, you may qualify for the Adoption Tax Credit.
- Filing Status: If you are unmarried and your child lived with you for more than half of the year, you may qualify for a higher standard deduction and lower tax rates by filing as head of household.
- Credits and Deductions: Your child may qualify for different education credits or education deductions when enrolled in a qualifying school program.
See what other tax credits and tax deductions may be available to you.
Advance Child Tax Credit, 2021
The remainder of this page focuses on the enhanced Child Tax Credit and the advance CTC payments. This is archived information which does not apply to any other year tax returns. See resources to file your 2021 Taxes:
Important: You only have until April 15, 2025 to claim your 2021 Child Tax Credit as part of your 2021 Refund. You also only have until this date to claim a missing third stimulus payment.
Due to the American Rescue plan, the IRS had set up an online page for the Advance Child Tax Credit and began disbursing up to $300 per child in monthly payments in July 2021 for each child 17 and younger that parents claimed for tax purposes. If you generally did not file a tax return, you needed to have filed a 2020 Tax Return so the IRS would have had record of the number of dependents you will claim. Parents or guardians could also enroll via the IRS CTC Update Portal - now defunct. Otherwise, you may not have received the advance payments: claim the full amount of your 2021 CTC by preparing and filing a 2021 Return.
As a result of the American Rescue Plan Act (ARPA) of 2021, the various tax breaks and credits had been changed for 2021. All these changes only applied to 2021.
The credit allowed 17-year-old dependents to qualify and provided up to $3,000 per qualifying child or $3,600 per qualifying child under age 6. The credit was also fully refundable - it has always been a partially refundable credit - and was made more accessible for those without taxable income by removing the $2,500 earnings floor. In other words, you did not need to have any earned income to claim the 2021 credit.
Similarly to the stimulus payments and the Recovery Rebate Credit, you were able to claim a portion of the Child Tax Credit as advance payments. Throughout the year, you may have received payments on a scheduled basis in 2021; you will need to claim the remainder of the credit on your 2021 Tax Return. The IRS issued these in July and continued through December of 2021. Monthly payments gave qualifying taxpayers $300 for dependents under 6 years old and $250 per month for dependents under 17 via direct deposit or by check through the mail.
The maximum income threshold was changed significantly. For Tax Year 2021, single taxpayers were eligible for the full credit if their adjusted gross income (AGI) was at or below $75,000 or $150,000 for married filing jointly. Additionally, the limit for the phaseout was $112,000 for head of household. The amount phased out by $50 per $1000 over the threshold. This was only if taxpayers claim the increased credit - the normal, $200,000 single/$400,000 married filing joint threshold still applied if a taxpayer did not qualify for the increased credit and, instead, claimed the regular credit with pre-ARPA rules.
You may be eligible to receive a fully refundable Child Tax Credit for 2021 if your income is within the above mentioned threshold. Additionally, you have been eligible to claim periodic installments of this payment during the tax year. For 2021, you may have received in advance, 50% of the Child Tax Credit during 2021. You will have to claim the remaining 50% on your 2021 Tax Return.
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