The child tax credit is a refundable tax credit of up to $3,600 per qualifying child under 18. And in 2021, you may be able to get some of the child tax credit you are due sooner, in the form of monthly advance payments. This was a stipulation in the The American Rescue Plan Act (aka, the coronavirus stimulus package that took effect in March), and the first monthly child tax credit payments are set to go out in July.
Key facts about the child tax credit in 2021
How much you can get per child
In 2021, the child tax credit offers up to $3,000 per qualifying dependent child 17 or younger on Dec. 31, 2021. The credit increases to $3,600 if the child is under 6 on Dec. 31, 2021.
This is a tax credit, which means it reduces your tax bill on a dollar-for-dollar basis. The child tax credit is also refundable; that is, it can reduce your tax bill to zero and you might be able to get a tax refund check for anything left over.
How to qualify for the child tax credit
You can take full advantage of the credit only if your modified adjusted gross income is under $75,000 for single filers, $150,000 for married filing jointly and $112,500 for head of household filers. The credit begins to phase out above those thresholds.
Some of the other child-related eligibility requirements for the child tax credit include:
You must have provided at least half of the child’s support during the last year, and the child must have lived with you for at least half the year (there are some exceptions to this rule; the IRS has the details here).
The child cannot file a joint tax return (or file it only to claim a refund).
To take the Child Tax Credit for the 2021 tax year, the child has to be 17 or younger on Dec. 31, 2021.
Advance child tax credit payments: What to know
The American Rescue Plan Act of 2021 allows parents to get monthly checks over the second half of this year as an advance payment on their 2021 child tax credit. Here are some things to know about how that works:
You can either claim 100% of your 2021 child tax credit on your taxes when you do your 2021 taxes (that's the tax return due in April 2022), or you can get 50% of that money now in cash and claim the other 50% on your taxes later.
Under the cash payment program, you get six monthly payments from the U.S. Treasury via direct deposit starting July 15 and running through December 2021. For example, if you qualify for a $3,000 child tax credit, you could get six $250 payments between July and December (for a total of $1,500) and then claim the remaining $1,500 on your tax return.
The payments will be made on the 15th of each month, unless the 15th falls on a weekend or holiday. They will be direct deposit, paper check or debit card.
The IRS will use your most recent tax return to determine whether you qualify for the child tax credit and to see how old the kids will be so it knows how much to send you each month.
Low-income families who may not normally file a tax return can use the IRS' non-filers sign-up tool to register for the monthly advance child tax credit payments.
If you'd rather claim 100% of your child tax credit at the end of the year, you can opt out of the periodic payment program via the IRS' Child Tax Credit Update portal.
If it turns out you were overpaid or underpaid during the year, you may need to true that up on your tax return at the end of the year.
Estimate your child tax credit amount
Pre-2021 Child Tax Credit facts and figures
If you haven't yet filed your return for the 2020 tax year, you may be interested in these figures and stipulations.
The credit amount is up to $2,000 per qualifying dependent child 16 or younger at the end of the calendar year. There is a $500 nonrefundable credit for qualifying dependents other than children.
You can take full advantage of the credit only if your modified adjusted gross income is under $400,000 for married filing jointly, and $200,000 for everybody else.
Up to $1,400 of the credit is refundable; that is, it can reduce your tax bill to zero and you might be able to get a refund on anything left over.
For the 2020 tax year, there are special rules due to coronavirus: You can use either your 2019 income or your 2020 income to calculate your tax credit, and you can use whichever number gets you the bigger tax credit. (This is also the case for the Earned Income Tax Credit.) Be sure to ask your tax preparer to run the numbers both ways.
To take the child tax credit for the 2020 tax year, the child has to be 16 or younger on Dec. 31, 2020.
Other child tax breaks to know
The Child and Dependent Care Tax Credit
What it is and how much you can get
For the 2021 tax year, the Child and Dependent Care Credit can get you up to 50% of up to $8,000 of child care and similar costs for a child under 13, a spouse or parent who cannot care for themselves, or another dependent so that you can work (and up to $16,000 of expenses for two or more dependents).
The percentage of allowable expenses decreases for higher-income earners — and therefore the value of the credit also decreases.
In the past this credit was not refundable, which meant it could reduce your tax bill to zero but you wouldn't get a refund on anything left over from the credit. For the 2021 tax year, however, the credit is refundable.
Some states also offer their own versions of this credit for child care and dependent care. They are often simply a percentage of the federal credit, but your state could expand eligibility, adjust the income thresholds or provide other incentives.
How to qualify for the Child and Dependent Care Tax Credit
A dependent child must be 12 or younger at the time the child care is provided.
Spouses and other dependents don’t have an age requirement, but IRS rules say they must have been physically or mentally incapable of self-care and must have lived with you for more than half the year.
If you’re married, you must file as married filing jointly.
You must have earned income — money you earned from a job. Investment or dividend income doesn’t count.
You must provide the care provider’s name, address and Taxpayer Identification Number — either a Social Security number or an Employer Identification Number.
You can’t claim the credit for payments to care providers who are:
A parent of the dependent child
A dependent listed on your tax return
Your child who is age 18 or younger, even if they’re not listed as a dependent on your return
Keep in mind that qualifying expenses can go beyond physical care and extend to household expenses such as paying someone to help with cooking and cleaning.
The Earned Income Tax Credit
What it is and how much you can get
The Earned Income Tax Credit is specifically designed to benefit working people with low incomes. People with kids can get a higher credit.
This table shows both the maximum credits and the maximum income allowed before losing the benefit.
2021 Earned Income Tax Credit (for taxes due in April 2022)
Number of children
Maximum earned income tax credit
Max earnings, single or head of household filers
Max earnings, joint filers
3 or more
To qualify for the Earned Income Tax Credit, you have to file a tax return, even if you don’t owe tax and are not legally obligated to file a return. And a number of states offer some version of an earned income tax credit for working families, so you might be able to get that credit, too.