What Is The Child Tax Credit Refundable?
The Child Tax Credit (CTC) is a federal tax credit of up to $2,000 per qualifying child for the 2021 tax year. It’s designed to help families with the costs of raising children. A refundable portion, the Additional Child Tax Credit (ACTC), can result in a refund for families who don’t owe any taxes. The CTC was expanded by the Tax Cuts and Jobs Act of 2017, making the credit even more generous.
Who Qualifies for the Child Tax Credit?
In order to qualify for the CTC, you must meet the following requirements:
- You must have a qualifying child who is either a US citizen, a US resident, or a US national.
- The child must be under 17 years of age at the end of the tax year.
- The child must be claimed as a dependent on your federal tax return.
- You must have a valid Social Security Number for the child.
- You must have earned income of at least $2,500.
How Much Is the Child Tax Credit Refundable?
The CTC is worth up to $2,000 per qualifying child. Of this amount, up to $1,400 can be refundable. The refundable portion is known as the Additional Child Tax Credit (ACTC). The ACTC is available to families who don’t owe any federal income tax and can result in an extra refund check. The amount of the ACTC is determined by subtracting any nonrefundable CTC from 15% of the taxpayer’s earned income in excess of $2,500, up to a maximum of $1,400.
How Do I Claim the Child Tax Credit Refundable?
To claim the CTC and ACTC, you must file a federal income tax return and include IRS Form 1040 or 1040-SR. If you have a qualifying child, you must file IRS Form 8812. You must also provide all necessary documentation, such as your child’s Social Security Number, to claim the credit. You should also keep all of your records, such as W-2 forms, to prove your eligibility.
Can I Claim the Child Tax Credit Refundable if I'm Self-Employed?
Yes, you can still claim the CTC and ACTC if you’re self-employed. However, you must report your self-employment income on your tax return. If you’re self-employed and earn more than $400 in net income, you’re required to pay self-employment tax. This income is also considered earned income for the purposes of the CTC and ACTC.
What Other Tax Credits Can I Claim?
In addition to the CTC and ACTC, there are other tax credits that can help lower your taxes. For example, the Earned Income Tax Credit (EITC) is available to low- and moderate-income workers. The American Opportunity Credit helps offset the costs of higher education, and the Child and Dependent Care Credit helps offset the costs of childcare. Additionally, there are credits available for home energy efficiency upgrades, adoption expenses, and healthcare expenses.
Should I Claim the Child Tax Credit Refundable?
The CTC and ACTC can provide a significant tax benefit for families with qualifying children. If you have a qualifying child, you should claim the CTC and ACTC on your tax return. If you’re not sure if you qualify for the credit, it’s a good idea to consult a tax professional. They can help you determine if you qualify and how to maximize your tax savings.
Conclusion
The CTC and ACTC are valuable tax credits for families with children. They can provide a significant tax benefit and can even result in a refund if you don’t owe any taxes. To take advantage of these credits, you must meet the eligibility requirements and file the proper forms. A tax professional can help you determine if you qualify and how to maximize your tax savings.