Child Tax Credits

Updated for filing 2021 tax returns

Are there tax breaks for having children?

Among all the new and exciting challenges with a new child, you may not have considered how your child will affect your taxes. No worries, it’s nothing but good news.

Even if born on the last day of the year, the IRS counts your child as having lived with you all year—so you get the full value of the tax breaks available to parents.

How much is the Child Tax Credit worth?

Due to the American Rescue Plan Act (ARP Act), the Child Tax Credit will bump up in 2021 to $3,000 for children between 6 and 17 and $3,600 for children under 6. Plus, instead of only providing that amount once a year when filing, the IRS has distributed half the tax credit in advance in increments of $250 or $300 per month (depending on the age of the child). Taxpayers who didn’t get the early payments can claim the whole credit when they file in 2022.

The $2,500 earned income requirement has been removed, so unemployed parents can still qualify for the credit. The credit begins phasing out at a rate of $50 for every $1,000 over $75,000 for single filers, $112,500 for heads of household and $150,000 for married couples filing jointly.

In addition to the requirements for a qualifying child, the child must meet these requirements to qualify for the full Child Tax Credit:

• You must claim the child as a dependent on your return.
• The child can’t have provided over half of their own support for the year.
• The child must have a Social Security Number.

What is the Credit for Other Dependents?

There is also a $500 Credit for Other Dependents, available for qualifying dependents who don’t meet all the requirements for the Child Tax Credit.

If you file with 1040.com, don’t worry about calculating whether you’ll get one credit or the other—based on info you provide, we’ll make sure you get the one you qualify for.

Additional Child Tax Credit

The Additional Child Tax Credit (ACTC) is one poorly named tax break. The name doesn’t mean it’s a credit for an additional child; it’s an additional credit for a child. This credit is for parents who were not able to claim the full Child Tax Credit because it amounted to more than their tax liability.

Since the entire CTC is refundable in 2021, the ACTC isn’t necessary. We may see it make a comeback in future years if the CTC does not keep its fully refundable status, but for now, you have everything you need without using the ACTC.

Filing your taxes and claiming tax breaks for your family is simple with 1040.com

Keeping the filing process easy is what we’re all about—and to file everything you need for your household for just $25, you’ll be well on your way to getting taxes done without the headache.

That’s why we’re the feel-good tax company.

If you haven’t yet, be sure to sign up or log in to get started.

Also see:
Child and Dependent Care
Claiming a Child When You’re Divorced or Separated