How to Get the Child Tax Credit
The Child Tax Credit helps you save money on your tax bill for each child you claim as a dependent. The amount of the credit depends on factors like your income and the age of your qualifying children. Most taxpayers who qualify for the Child Tax Credit receive it as part of their tax refund when they file their return.
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- Updated: September 20, 2022
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What Is the Child Tax Credit?
The Child Tax Credit (CTC) reduces the amount of taxes you owe by a certain amount for each child under 18 years old that you claim as a dependent.
Tax credits give you a dollar-for-dollar reduction of your tax liability, which is the total amount of taxes you owe each year. This is different from a tax deduction, which lowers the amount that can be taxed from your gross income. In other words, tax credits have the same value for each taxpayer who claims them, while the value of tax deductions depends on your income.
The Child Tax Credit was established in 1997 as part of the Taxpayer Relief Act and the original credit amount was $400 per child. The value of the credit has increased over the years to keep pace with inflation and the needs of taxpayers. For tax year 2021, the IRS increased the CTC’s value to $3,600 per child ages 5 and under and $3,000 per child ages 6 through 17.
The CTC is refundable, which means that if the value of the credit is greater than the amount of taxes you owe, you can be paid back some or all the excess. If the CTC’s value exceeds the amount of taxes owed, you could receive up to $1,400 as a tax refund. This refund is known as the Additional Child Tax Credit (ACTC).
The American Rescue Plan Act, which passed in 2021, increased the CTC amount per child and made the credit fully refundable. The act also authorized the IRS to disburse half of the CTC amount to families as periodic advance payments starting in July 2021. Nearly 61 million children received these advance payments as of August 2021.
Do You Qualify for the Child Tax Credit?
To qualify for the Child Tax Credit, taxpayers must meet certain requirements based on income, number of dependents, age, filing status and other factors.
The amount of the tax credit is reduced for higher income filers, as demonstrated in the table below.
|Modified AGI||Reduced Credit Amount Per Child|
|$75,000 for single filers|
$112,500 for heads of household
$150,000 for married filing jointly
|Reduced by $50 for each $1,000 (or fraction thereof) over the threshold, until credit reaches $2,000 per child.|
|$400,000 for married filing jointly|
$200,000 for all other filers
|Reduced by $50 for each $1,000 (or fraction thereof) over the threshold, until filer is disqualified from the credit.|
Aside from your income, you must also have at least one “qualifying child” to receive the CTC. There are six eligibility requirements the dependent must meet to qualify.
- The qualifying child must not have turned 18 before Jan. 1 of the current year.
- The qualifying child must be the taxpayer’s child, stepchild, eligible foster child, sibling, stepsibling, half-sibling or a descendant of any of them such as a niece, nephew or grandchild
- The qualifying child must not have provided more than half of his or her own financial support during the tax year.
- With few exceptions, the qualifying child must have lived with the taxpayer for more than half of the tax year.
- The qualifying child must be a United States citizen, national, or resident alien.
- Claimed as a Dependent
- The qualifying child must be claimed on the taxpayer’s return as a dependent and cannot have filed a joint return with a spouse except to claim a refund of withheld income tax or estimated tax paid.
You can find out if you’re eligible to receive the CTC with the Advance Child Tax Credit Eligibility Assistant. To use this free tool from the IRS, you’ll need your previous year’s tax return or documents to prove income such as W-2s or 1099s.
There is no application process to claim the CTC; you just need to file your taxes for the tax year. Certain low-income taxpayers may not need to file a tax return. To claim the credit without filing, you must sign up to receive the credit using the government’s non-filer sign-up tool.
How Does the Child Tax Credit Impact Your Taxes?
If you’re one of the millions of Americans who received advance CTC payments in 2021, you may be wondering how those payments will affect your tax refund in 2022.
Those advance monthly credits are factored into your tax refund, so you may see a smaller refund or even a bill from the IRS once you file your tax return. This is because the eligibility for these advance credits was calculated based on taxpayers’ 2020 income, which for many Americans was negatively impacted by the COVID-19 pandemic.
If those who received an advance credit earned more in 2021 than they did in 2020, their eligibility to receive the CTC may be reduced or even eliminated. Tax experts anticipate that many Americans will be surprised by the smaller write-off on their tax return, and some may even have to repay their credits depending on how much their income changed in 2021.
What Is Letter 6419?
Beginning in late December, the IRS issued Letter 6419 to Americans who received Advance Child Tax Credit payments. This important letter details the total amount the taxpayer received in ACTC payments and the number of qualified children that were used to calculate the credit amount. You can use this information when you file your tax return to claim any remaining money from the CTC that you have not yet received.
Many Americans count on receiving a certain amount of their tax refund to make important personal financial decisions, so it’s important to understand how claiming this credit will impact your taxes. If you want to get the most out of your tax refund and claim all the credits that are available to you, working with a CPA or other tax professional can set you on the right path.
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11 Cited Research Articles
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- Benefits.gov. (n.d.) What Is Child Tax Credit? Retrieved from https://www.benefits.gov/benefit/938
- Dore, K. (2022, January 11). How Those Child Tax Credit Checks May Affect Your Tax Refund This Year. Retrieved from https://www.cnbc.com/2022/01/11/how-those-child-tax-credit-checks-may-affect-your-tax-refund-this-year.html
- GetCTC.org. (n.d.) Claim Your Child Tax Credit. Retrieved from https://www.getctc.org/en
- Internal Revenue Service. (2022, February 28). 2021 Child Tax Credit and Advance Child Tax Credit Payments — Topic C: Calculation of the 2021 Child Tax Credit. Retrieved from https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-c-calculation-of-the-2021-child-tax-credit
- Internal Revenue Service. (2022, February 3). Filing Season 2021 Child Tax Credit Frequently Asked Questions — Topic B: Eligibility Rules for Claiming the 2021 Child Tax Credit on a 2021 Tax Return. Retrieved from https://www.irs.gov/credits-deductions/filing-season-2021-child-tax-credit-frequently-asked-questions-topic-b-eligibility-rules-for-claiming-the-2021-child-tax-credit-on-a-2021-tax-return
- Internal Revenue Service. (2022, February 2). IRS Issues Information Letters to Advance Child Tax Credit Recipients and Recipients of the Third Round of Economic Impact Payments; Taxpayers Should Hold onto Letters to Help the 2022 Filing Season Experience. Retrieved from https://www.irs.gov/newsroom/irs-issues-information-letters-to-advance-child-tax-credit-recipients-and-recipients-of-the-third-round-of-economic-impact-payments-taxpayers-should-hold-onto-letters-to-help-the-2022-filing-season
- Internal Revenue Service. (2022, January 24). Understanding Your Letter 6419. Retrieved from https://www.irs.gov/individuals/understanding-your-letter-6419
- Internal Revenue Service. (2021, November 16). Advance Child Tax Credit Eligibility Assistant. Retrieved from https://www.irs.gov/credits-deductions/advance-child-tax-credit-eligibility-assistant
- Karpman, M. et al. (2021, November 4). Who Has Received Advance Child Tax Credit Payments, and How Were the Payments Used? Retrieved from https://www.urban.org/research/publication/who-has-received-advance-child-tax-credit-payments-and-how-were-payments-used
- Urban-Brookings Tax Policy Center. (2021, May). What Is the Child Tax Credit? Retrieved from https://www.taxpolicycenter.org/briefing-book/what-child-tax-credit
- Urban-Brookings Tax Policy Center. (2020, May). What Are Tax Credits and How Do They Differ From Tax Deductions? Retrieved from https://www.taxpolicycenter.org/briefing-book/what-are-tax-credits-and-how-do-they-differ-tax-deductions