The Child Tax Credit: Extra Cash In Your Pocket

In 2021 the IRS made some updates to the Child Tax Credit through President Biden's Build Back Better Act. The Child Tax Credit is used to help families who are raising children by putting a little extra cash in their pockets for necessities. The credit increased from $2,000 per qualifying child to $3,600 for children under the age of 5 and $3,000 for children ages 6 through 17. For dependents older than 17 they can still qualify for the $500 credit for other dependents.

There are some limitations to the Child Tax Credit. If you make more than $150,000 per year and file married filing jointly or $112,500 filing head of household the child tax credit is reduced to $2,000 per qualifying child. If you haven’t filed a tax return because your income is too low, the IRS has made a non‐filers tool to help low‐income families sign up for the child tax credit (www.getctc.org). At this website you can easily apply to receive the credit for each of your qualifying children. Keep in mind the changes made to the Child Tax Credit only apply to the 2021 tax year.

By: Nathan Kirby, Tax Senior at CROFT & FROST

Sources:

2021 Child Tax Credit and Advance Child Tax Credit Payments — Topic C: Calculation of the 2021 Child Tax Credit | Internal Revenue Service (irs.gov)

The Child Tax Credit | The White House