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page001
Level 1

Understanding the Child Tax Credit

I have quite a few questions and things to confirm.

1. Have we always gotten this child tax credit, just at the refund time? 

2. Has the amount changed? What is the total amount per child? 

3. I currently have 3 kids under 5 and I am receiving $300 per kid. How long will I get these payments? Until December? Until September? Until March of next year?

4. Is there a portion of the tax credit that I will still see during the refund time or am I getting the full disbursement monthly now?

5. I assume if my normal tax return is say 7500, but my total child tax credit is 9000 (3000 per child), then I would owe taxes of 1500 during tax filing time, is that correct? 

3 Replies
KochuK
Employee Tax Expert

Understanding the Child Tax Credit

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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Critter-3
Level 15
Hal_Al
Level 15

Understanding the Child Tax Credit

Q1. Have we always gotten this child tax credit (CTC), just at the refund time? 

A1.  Yes.

 

Q2. Has the amount changed? What is the total amount per child? 

A 2.  Yes.  I was $2000 per child, of which only (up to) $1400 was refundable. The Child Tax Credit (CTC) increased from $2000 to $3000  ($3600 for children under 6).  It's all refundable.  But, it's only for 2021.  Unless congress changes the law, it goes back to the old way in 2022. 

 

Q3. I currently have 3 kids under 5 and I am receiving $300 per kid. How long will I get these payments?

A 3. Thru  December,  6 months total.

 

Q. 4. Is there a portion of the tax credit that I will still see during the refund time?

A 4.  Yes, half of it.  $1800 per child, under 6. 

 

Q 5. I assume if my normal tax return is say 7500, but my total ADVANCE child tax credit is $5400 (1800 per child), then my refund, at tax filing time,  would be  $2100 ($7500 - 5400 = 2100).  Is that correct? 

A 5.  No. Your normal $7500 will be increased by $4800, the increase in the child tax credit (1600 x 3). So, 7500 + 4800 - 5400 = $6900 refund for 2021.   This assumes that your "normal $7500" included the full $1400 refundable portion of the old $2000 CTC (known as the Additional Child Tax credit).  So, your refund could be more than $6900.

 

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