Child tax credit

[Misskate]

I'm a full time college student and a single parent. I file my 1098, and wondering if I qualify for the child tax credit? When I did my taxes it didn't go through with it. I was told my grants and aid after tuition costs is taxable income and should have me qualify for it. 

[xmasbaby0]

Did you have income earned from working?    You can get the CTC if you had earned income.   They do not give you the CTC based on grants or student loans.

https://ttlc.intuit.com/questions/1900923-what-is-the-child-tax-credit

[Misskate]

Thank you. I was trying to search it myself but kept getting information about the new monthly tax credit that is starting in July. 

[Opus 17]

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@Misskate wrote:

Thank you. I was trying to search it myself but kept getting information about the new monthly tax credit that is starting in July. 

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For 2020, you must owe income tax from some source to get the Child Tax Credit, and the most you can get is up to the amount of tax you owe.  Because of the $12,000 standard deduction, you wouldn't owe any income tax unless your grants and scholarships exceeded your tuition by more than $12,000.  If your grants really were that large, you can check some items on a printed copy of your form 1040 or the PDF.  

1. Make sure your child is listed with their SSN and that the box for "qualifies for child tax credit" is checked.

2. Make sure your scholarship income is reported on line 1 with "SCH" written next to it.

3. If you owe income tax on line 16, you should get the child tax credit on line 19, but no more than the amount on line 16.  To get the full child tax credit of $2000, your tax on line 16 must be more than $2000. 

If you owe no tax, you won't get any of the standard child tax credit.  The "Additional Child Tax Credit" can be added to your refund even if you owe no tax, but you must have income earned from working to qualify for this.

For 2021, most of these rules are temporarily suspended, and I believe you would be eligible for $3000 (or $3600 if you child is under age 6) even if you don't work and don't owe tax. 

[Misskate]

Thank you. I did not owe any income tax as I haven't been employed. I had what was left of my unemployment but I know that doesn't qualify someone. So I wouldn't qualify for th3 additional credit either. 

I did read about the new thing for 2021 but still not understanding it. It will be a monthly dispersal instead?

[Opus 17]

@Misskate 

There are three key parts of the enhanced a child tax credit for 2021.

1. The credit is fully refundable even if you owe no income tax.  That means you should get the full amount of the credit, even if you did not work and even if you did not owe any income tax on your scholarship or other income.

2. The credit is increased to $3000 per child age 17 or less, and $3600 for each child aged five or less.

3. The IRS will begin making advance payments of $300 per child starting in July, 2021, based on your tax return information for 2020. If you claimed one eligible child on your 2020 return, you would expect to receive $300 per month starting in July. This is an advance payment on the full credit amount that will be calculated on your tax return, so if you take the advance payments, it will reduce your eventual tax refund by the same amount.  You will have the option of opting out of the advance payment process in order to only receive the full amount on your tax return by signing up at the IRS website. (This may also be useful for parents who might not claim their child as a dependent in 2021, such as due to a divorce or child custody situation. If you received advance payments based on a 2020 dependent, and then did not claim the child as a 2021 dependent, those advance payments would have to be paid back.)

If you received a tax refund in 2020, the advance payment should probably be paid to the same bank account. If you need to change your banking information to receive the advance payments, or if you want to opt out of the advance payments, you will have to visit the IRS website in June. (I don’t think it’s ready yet.)