Understanding the 2021 Child Tax Credit Updates
On October 17, 2022, the IRS sent out an announcement regarding the Child Tax Credit (CTC). Taxpayers who claim at least one child as their dependent on their 2021 tax return may not realize they may be eligible to benefit from the CTC. If taxpayers filed a 2021 tax return, they’re able to receive the second half of the credit if they’ve received the advance CTC payments last year in 2021.
Check Your Eligibility
The IRS urges taxpayers such as grandparents, foster parents, or people caring for siblings or other relatives to check their eligibility to receive the 2021 CTC. It’s crucial for taxpayers to review the eligibility rules to ensure that you’re still able to qualify. The IRS provides an interactive tax assistant tool that doesn’t take any longer than approximately 10 minutes that’s designed for taxpayers to determine if they’re qualified for the 2021 Child Tax Credit or the Credit for Other Dependents. To receive it, eligible taxpayers must file a 2021 tax return.
The information you’ll need:
- Your filing status.
- Whether you can claim the person as a dependent.
- The person’s date of birth.
Which Dependents Can Qualify For CTC?
Taxpayers are able to claim the Child Tax Credit for each qualifying child who has a valid Social Security number and issued by the Social Security Administration before the due date of the taxpayer’s tax return.
To be a qualifying child for the 2021 tax year, the dependent generally must:
- Be under age 18 at the end of the year.
- Be their son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister or a descendant of one of these (for example, a grandchild, niece, or nephew).
- Provide no more than half of their own financial support during the year.
- Have lived with the taxpayer for more than half the year.
- Be properly claimed as their dependent on their tax return.
- Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid.
- Have been a U.S. citizen, U.S. national or U.S. resident alien.
Eligibility Factors For Qualifying Individuals
Individuals qualify for the full amount of the 2021 CTC for every dependent if they meet ALL eligibility factors and have an annual income no more than:
- $150,000 if they’re married and filing a joint return, or if they’re filing as a qualifying widow or widower.
- $112,500 if they’re filing as a head of household.
- $75,000 if they’re a single filer or are married and filing a separate return.
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