What Is The Child Tax Credit For 2021?
The Child Tax Credit is a federal tax credit that provides a partial refund for qualifying taxpayers with dependent children under the age of 17. The credit is designed to help offset the cost of raising children by providing a tax break to taxpayers. For the 2021 tax year, the Child Tax Credit is worth a maximum of $2,000 per qualifying child, with up to $1,400 of the credit being refundable. The credit can only be claimed by taxpayers who have a legitimate Social Security Number (SSN) for each qualifying child.
Who Qualifies for the Child Tax Credit?
In order to qualify for the Child Tax Credit, taxpayers must meet certain criteria. The child must be related to the taxpayer, either by birth, adoption, or legal guardianship, and must be under the age of 17 by the end of the tax year. The child must also have a legitimate Social Security Number (SSN) in order for the taxpayer to claim the credit. Additionally, the taxpayer must pass a few other tests in order to qualify for the credit.
The first test is the “relationship test.” This test requires that the taxpayer is related to the child in one of the ways listed above (birth, adoption, or legal guardianship). The second test is the “support test.” This test requires that the taxpayer provides more than half the financial support for the child during the tax year. The last test is the “joint return test.” This test requires that the child not file a joint tax return with his or her spouse.
How Much is the Child Tax Credit Worth?
The Child Tax Credit is worth a maximum of $2,000 per qualifying child. Of the $2,000, up to $1,400 is refundable, meaning that even if the taxpayer does not owe any taxes, he or she can still receive the $1,400 refund. The remaining $600 is nonrefundable, meaning that the taxpayer must owe taxes in order to receive the credit. Additionally, the credit is phased out for taxpayers with higher incomes.
How to Claim the Child Tax Credit?
In order to claim the Child Tax Credit, taxpayers must complete and submit Form 1040 or Form 1040-SR. Depending on the taxpayer’s income, the credit may be claimed on either line 12a or line 12b of Form 1040 or Form 1040-SR. The credit can only be claimed if the taxpayer has a legitimate Social Security Number (SSN) for each qualifying child. Additionally, the credit can be claimed on the taxpayer’s state income tax return, if applicable.
Additional Child Tax Credit
In addition to the Child Tax Credit, taxpayers may also be eligible for the Additional Child Tax Credit. The Additional Child Tax Credit is for taxpayers who do not qualify for the full $2,000 Child Tax Credit due to their income. The Additional Child Tax Credit is a refundable credit, meaning that even if the taxpayer does not owe any taxes, he or she can still receive the credit. The Additional Child Tax Credit is claimed on line 13a of Form 1040 or Form 1040-SR.
Child and Dependent Care Tax Credit
Taxpayers who are paying for child care or dependent care expenses may also be eligible for the Child and Dependent Care Tax Credit. The Child and Dependent Care Tax Credit is a nonrefundable credit, meaning that the taxpayer must owe taxes in order to receive the credit. The credit is designed to help offset the cost of child care or dependent care expenses, such as daycare or after-school care. The credit is claimed on line 10 of Form 1040 or Form 1040-SR.
Conclusion
The Child Tax Credit is a federal tax credit that provides a partial refund for qualifying taxpayers with dependent children under the age of 17. The credit is worth a maximum of $2,000 per qualifying child, with up to $1,400 of the credit being refundable. Taxpayers must meet certain criteria in order to qualify for the credit, and the credit is claimed on Form 1040 or Form 1040-SR. Additionally, taxpayers may also be eligible for the Additional Child Tax Credit and the Child and Dependent Care Tax Credit.