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Child Tax Credit: Know the Current Rules and What You Qualify For

Michael Ringler


Among all the social programs being debated in Washington these days, the Child Tax Credit has been getting more than its share of attention. First implemented in 1997 as a $500 tax write-off, the credit was raised to $2,000 per child in 2017, then again this past year to $3,600 per child aged zero to 6, and $3,000 each for children 6 to 17 years old. To qualify for the base of $2,000, an individual taxpayer must have a taxable income of $200,000 or less; the limit is $400,000 for married taxpayers filing jointly. The additional portion of the 2021 payment starts phasing out at taxable incomes of $75,000 for an individual, $112,500 for head of household, and $150,000 for married filing jointly.

The 2021 credit has been issued as monthly payments to qualifying families, starting in July. Parents were automatically enrolled based on the 2020 tax returns, so qualifying families should have received half the credit in payments by the end of 2021. To receive the second half of the credit, those parents must qualify based on their 2021 taxable income and file for the credit with their 2021 tax returns. Parents who opted out of the program, or were not enrolled based on their 2020 return but now qualify, or who had their first child in 2021, should file for the entire credit with their 2021 return.

Other nuances to be aware of:

  • If you qualified for the tax credit based on your 2020 tax return but your 2021 taxable income is in excess of the limits, or the child was not domiciled in your house, you will have to return any applicable tax credit payments you received in 2021.
  • Parents who have been receiving the base credit of $2,000 but qualify for the additional amounts for 2021 can file for the $1,600 or $1,000 per child with their 2021 tax return.
  • The IRS’s January 2022 “Letter 6419” outlines the payments qualifying taxpayers have received. The amount of your payment as listed in your letter should match the Child Tax Credit Update Portal on the IRS website. It should also match the numbers you file on your return.
  • If the current Child Tax Credit is not extended, the credit will return to the original $2,000 lump sum.
  • A bonus for new parents filing returns: If you welcomed a child at any point in 2021, the child is eligible for a $1,400 stimulus check.
  • You can claim the credit even if you don’t file a tax return.

The Child Tax Credit is just one of several federal programs that resulted in payments to taxpayers in 2021. As such, it is important to review your tax return with your accountant to make sure you are reporting all payments made to you—or that you didn’t miss payments you qualified for. That is, make sure you got what you were supposed to get but nothing beyond that you would owe back to the government. It’s always in your best interests to get those things right up front, before you hear from the IRS.


The information included in this document is for general, informational purposes only. It does not contain any investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any investment advice. If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.

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The historical and current information as to rules, laws, guidelines or benefits contained in this document is a summary of information obtained from or prepared by other sources. It has not been independently verified, but was obtained from sources believed to be reliable. HBKS® Wealth Advisors does not guarantee the accuracy of this information and does not assume liability for any errors in information obtained from or prepared by these other sources.

HBKS® Wealth Advisors is not a legal or accounting firm, and does not render legal, accounting or tax advice. You should contact an attorney or CPA if you wish to receive legal, accounting or tax advice.

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