Hi page001,
Yes, with the newly expanded child tax credit and advanced child tax credit payment, I am glad to explain.
1. and 2. Before tax year 2021, there is always child tax credit to be claimed on tax form, part to offset tax liability, part can be refunded. For tax year 2021, the amounts increase by age group with different income limitation.
For tax year 2021, the Child Tax Credit is increased from $2,000 per qualifying child to:
- $3,600 for children ages 5 and under at the end of 2021; and
- $3,000 for children ages 6 through 17 at the end of 2021.
3. IRS is sending out 50% of estimated child tax credit during 2021 for tax year 2021 starting July 15 to December 15.
4. If all your children qualify for max child tax credit, then you will received the rest of 50% when filing 2021 tax return during 2022 filing season.
5. The formula is tax liability vs. payments+ credits.
If tax liability > payments + credits, there is a balance due.
If tax liability < payments + credit, there is a refund.
The remaining child tax credit (total less what you received already) is part of the "credits".
Based on your example, the total child tax credit is $9,000. You received $4,500 during 2021. Then you have remaining $4,500 to apply to the above formula to determine if you have a balance due or a refund.
Hope the above helps.
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