This tax credit helps offset the costs of raising kids and is worth up to $3,600 for each child under 6 years old and $3,000 for each child between 6 and 17 years old. You can get half of your credit through monthly payments in 2021 and the other half in 2022 when you file a tax return. You can get the tax credit even if you don’t have recent earnings and don’t normally file taxes. Learn more about monthly payments and new changes to the Child Tax Credit.
Raising children is expensive—recent reports show that the cost of raising a child is over $200,000 throughout the child’s lifetime. The Child Tax Credit (CTC) can give you back money at tax time to help with those costs. If you owe taxes, the CTC can reduce the amount of income taxes you owe. If you make less than about $75,000 ($150,000 for married couples and $112,500 for heads of households) and your credit is more than the taxes you owe, you get the extra money back in your tax refund. If you don’t owe taxes, you will get the full amount of the CTC as a tax refund.
How much can I get with the CTC?
Depending on your income and family size, the CTC is worth up to $3,600 per child under 6 years old and $3,000 for each child between ages 6 and 17. CTC amounts start to phase-out when you make $75,000 ($150,000 for married couples and $112,500 for heads of households). Each $1,000 of income above the phase-out level reduces your CTC amount by $50.
If you don’t owe taxes or your credit is more than the taxes you owe, you get the extra money back in your tax refund.
Am I eligible for the CTC?
There are three main criteria to claim the CTC:
- Income: You do not need to have earnings.
- Qualifying Child: Children claimed for the CTC must be a “qualifying child”. See below for details.
- Taxpayer Identification Number: You and your spouse need to have a social security number (SSN) or an Individual Taxpayer Identification Number (ITIN).
To claim children for the CTC, they must pass the following tests to be a “qualifying child”:
- Relationship: The child must be your son, daughter, grandchild, stepchild or adopted child; younger sibling, step-sibling, half-sibling, or their descendent; or a foster child placed with you by a government agency.
- Age: The child must be 17 or under on December 31, 2021.
- Residency: The child must live with you in the U.S. for more than half the year. Time living together doesn’t have to be consecutive. There is an exception for non-custodial parents who are permitted by the custodial parent to claim the child as a dependent (a waiver form signed by the custodial parent is required).
- Taxpayer Identification Number: Children claimed for the CTC must have a valid SSN. This is a change from previous years when children could have an SSN or an ITIN.
- Dependency: The child must be considered a dependent for tax filing purposes.
Credit for Dependents
A $500 non-refundable credit is available for families with qualifying dependents who can’t be claimed for the CTC. This includes children with an Individual Taxpayer Identification Number who otherwise qualify for the CTC. Additionally, qualifying relatives (like dependent parents) and even dependents who aren’t related to you, but live with you, can be claimed for this credit.
Since this credit is non-refundable, it can only help reduce taxes owed. If you can claim both this credit and the CTC, this will be applied first to lower your taxable income.
How to claim the CTC
There are two steps to signing up for the CTC. To get the advance payments, you had to file 2020 taxes (which you file in 2021) or submitted your info to the IRS through the 2021 Non-filer portal or GetCTC (both tools are now closed). If you did not sign up for advance payments, you can still get the full credit by filing a 2021 tax return (which you file in 2022).
Even if you received monthly payments, you must file a tax return to get the other half of your credit. In January 2022, the IRS will send Letter 6419 that tells you the total amount of advance payments sent to you in 2021. Please keep this letter for your tax records. On your 2021 tax return (which you file in 2022), you may need to refer to this notice to claim your remaining CTC.
Going to a paid tax preparer is expensive and reduces your tax refund. Luckily, there are free options available. You can visit a Volunteer Income Tax Assistance (VITA) site to have IRS-certified volunteers accurately file your taxes for free. You can also visit GetYourRefund.org or MyFreeTaxes.com to file your own taxes for free online if you do not have self-employment income.