Stimulus and child care credit amount

[adamsl22]

My wife dropped down from near full time to part which has impacted our combined earnings to a lower threshold. I believe this new threshold will be lower than the amount required to get the full child care credit and stimulus that went out at the beginning of the year. We did not receive the last stimulus because of our income bracket from the previous year. Will the stimulus and the difference in our child care credit be adjusted and paid when we file our taxes for 2021?

[LauraJCPA]

Yes, the stimulus and child tax credits will be reconciled on your 2021 tax return.  Any stimulus payment you became eligible for due to a change in income will be paid when you file your 2021 return. But the good news is the 2021 child tax credit is fully refundable! That means you will get the full credit, even if you owe no tax.

Here is a link to our Tax Tips Guides article which has a calculator so you can see what your credit will be.
Child Tax Credit Calculator and Top 7 Requirements 

You also may be eligible for Advanced Child Tax Credit payments. You can see what they may be in the same article.

[OmM1]

Hello Adamsl22

I understand for 2020 due to your combined income level,  you were not entitled to get full child tax credit (you did mention child care tax credit and I am assuming you did not mean child and dependent care credit) and stimulus payment. Further understand that your combined earnings have since dropped and you are expecting to qualify for full child  tax credit for 2021 and stimulus payment that was authorized under  the American Rescue Plan Act of 2021.

Since the payments made in March (or thereafter) for the third stimulus payment were simply an advance payment of 2021 Recovery Rebate Credit and if you did not get any payment in advance after filing your 2021 tax return you will be able to claim this credit as a part of and on your 2021 tax return.

As to Child Tax credit, the payments being made in advance starting this July as are simply advance payment of 2021 tax credit and any amount determined to be due upon filing your tax return less the advance payments will still be paid to you via your tax refund.

Hope this answers question and you can rest assured that any payment due to you but not already paid to you as an advance will be available to you via your tax refund after filing you 2021 taxes.

[erinm0717]

Hi Adamsl22!

The Child Care credit is can change based on income but usually increases with a decreased amount of income.  Every situation is different though.  Here is a link with some great information on this credit: https://turbotax.intuit.com/tax-tips/family/the-ins-and-outs-of-the-child-and-dependent-care-tax-cre....  

This year, there was a way to reconcile the stimulus amount changes on the tax return.  For the third stimulus payment, there will be a way to claim this on your taxes for the 2021 tax year in 2022.  More information should come out on this as we get closer to the 2021 tax season.  In 2020, no one was required to pay back the stimulus but they have not set the rules for 2021 yet.  Here is a calculator for the 3rd stimulus payment: https://turbotax.intuit.com/stimulus-check/.  I hope this helps and have a great day!

[adamsl22]

Thanks!

[adamsl22]

Thank you. That answered my questions and clarified other aspects to the question.