The Child Tax Credit and Child and Dependent Care Credit
Who is eligible to receive the Child Tax Credit?
When will I get my Child Tax Credits?
Who is eligible to claim the Child and Dependent Care Credit?
How do I claim the Child and Dependent Care Credit?
The Child Tax Credit and Child and Dependent Care Credit, put into place by the American Rescue Plan (ARP) Act, provide many sources of direct and indirect financial relief for families with low incomes. The Child Tax Credit is a tax benefit to help families who are raising children.
What is the Child Tax Credit?
The ARP Act created a monthly child allowance to replace the current Child Tax Credit (CTC). Beginning in July 2021, families who qualified for this year’s CTC on their tax return will receive monthly payments. These payments are of $300 per child younger than age 6 and $250 per child ages 6–17. This 1-year program will end on December 31, 2021.
Individual Taxpayer Income Number (ITIN) holders, including immigrant families with children who have Social Security numbers, are eligible to receive this credit. The IRS has launched a simplified online tool that will allow families not automatically enrolled in the program to receive the CTC.
Families should start receiving monthly payments in July 2021. The payment amount is based on the number of children claimed as dependents on a family’s most recent tax return (i.e., 2019 or 2020).
Who is eligible for the Child Tax Credit?
Nearly all families with kids will qualify for the Child Tax Credit. Some income limitations apply. For example, only couples making less than $150,000 and single parents (also called Head of Household) making less than $112,500 will qualify for the additional 2021 Child Tax Credit amounts. Families with high incomes may receive a smaller credit or may not qualify for any credit at all.
Most families will not have to do anything at all to receive the Child Tax Credit payments. If a family filed taxes this year (tax return for 2020), filed last year (tax return for 2019), or signed up for Economic Impact Payments (commonly called “stimulus checks”) using the IRS’s Non-Filer tool last year, you are all set and the IRS will automatically send you monthly payments.
When will I receive payments for the Child Tax Credit?
People who receive payments by direct deposit will get their first payment on July 15, 2021. After that, payments will go out on the 15th of every month. (In August, the payment will go out on August 13th since the 15th falls on a weekend.) If you have not provided the IRS with your bank account information on a recent tax return, a check will be sent out to you around the same time to the address the IRS has for you.
Most families will receive the full amount: $3,600 for each child under age 6 and $3,000 for each child ages 6 to 17. To get money to families sooner, the IRS will send families half of their 2021 Child Tax Credit as monthly payments of $300 per child under age 6 and $250 per child between the ages of 6 and 17.
To ensure that they receive the monthly payments starting in July 2021, families should file a 2020 tax return as soon as possible. Families will retroactively claim this allowance from January to June 2021 on next year’s tax returns. For more information, visit ChildTaxCredit.gov.
What is the Child and Dependent Care Credit?
The ARP Act expanded the size of the Child and Dependent Care Credit. Families are eligible for this tax credit if they needed care for any child younger than age 13. Also, for a disabled dependent of any age while working or looking for work. This benefit includes any amount paid (full or co-pay) for center-based childcare, babysitter care, summer camp, or care by adult relatives outside the tax household.
ITIN holders are eligible to receive this credit. This includes families who are immigrants with children born in the United States with a Social Security number,
Families should keep records of their childcare expenses to report on next year’s tax return. Even those who do not owe taxes should file. The credit will be fully refundable and could result in a refund.
Who is eligible to receive the Child and Dependent Care Credit?
The percentage of work-related expenses allowed as a Child and Dependent Care Credit depends on income. The maximum percentage of work-related expenses allowed as a credit is 50 percent. Eligibility for the Child or Dependent Care Credit can be a bit more complicated to determine. Determining eligibility is made easy using the following flow chart:
How do I claim the Child and Dependent Care Credit?
To claim the credit for 2021, families will need to complete Form 2441, Child and Dependent Care Expenses, and include the form when filing a tax return. In completing the form to claim the 2021 credit, families will need to provide a valid taxpayer identification number (TIN) for each qualifying person. Generally, this is the social security number for the qualifying person.
What if my family did not file taxes last year or the year before?
Families may be eligible for Child Tax Credit or Child and Dependent Care Credit payments even if they have not filed taxes recently. Not everyone is required to file taxes.
This year, Americans were only required to file taxes if they earned $24,800 as a married couple, $18,650 as a Head of Household, or $12,400 as a single filer. If a family had total income in 2020 below those levels, they can sign up to receive monthly Child Tax Credit payments using a simple tool for non-filers available on the IRS’s website.
Families can still file a return to get monthly Child Tax Credit Payments in 2021. They can also get tax benefits or a refund. For help filing a past due return, visit the IRS website.
To learn more about helping families understand and access available tax credits, please contact EITCOutreach.org. In addition, free tax preparation services may be available for eligible families. Call 740-620-4133 for details.
To get answers to your questions and/or to learn more information about the ARP act, please contact the National Center on Parent, Family, and Community Engagement at firstname.lastname@example.org or (855) 208-0909 (toll-free).
Information provided by the Administration for Children and Families
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