Expanded Child Tax Credit for 2021

The American Rescue Plan increased the amount of the Child Tax Credit (CTC). It is available for 17-year-old dependents and is it fully refundable for most families. Families can get the credit, even if they have little or no income from a job, business or other source.

To get the CTC, eligible families must file a return, even if they received monthly payments. Everyone must attach Schedule 8812 to their return.

Before 2021, the credit was worth up to $2,000 per eligible child. The law increased it to as much as $3,000 per dependents ages 6 through 17. It is $3,600 for dependents ages 5 and under.

Current Maximum Credit Available

The maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:

  • $75,000 or less for singles,
  • $112,500 or less for heads of household and
  • $150,000 or less for married couples filing a joint return and qualified widows and widowers.

Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every $1,000 in modified AGI.

Families Living in the US versus Abroad

For families living in the United States, the credit is fully refundable. It is called the Refundable Child Tax Credit (RCTC). An eligible family can get it even if they owe no federal income tax.

To get the RCTC, the taxpayer’s main home must be in the U.S. for more than half of 2021.

Members of the military meet this requirement, even if they are stationed abroad.

Before 2021, the refundable portion, known as the Additional Child Tax Credit (ACTC), was limited to $1,400 per child. In 2021, the $1,400 ACTC limit continues to apply to Americans abroad.

By law, the IRS must wait until after Feb. 15 to issue refunds to early filers claiming the ACTC or the Earned Income Tax Credit (EITC).

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