The Child Tax Credit (CTC) is a valuable tax break that helps families offset the costs of raising children. For the 2021 tax year, the CTC was significantly expanded, providing increased financial assistance to eligible families. This comprehensive guide will delve into the income limits for the 2021 CTC, explaining how they impact the amount of the credit families can claim.
Income Limits for the 2021 Child Tax Credit
The CTC is available to families with modified adjusted gross income (MAGI) below certain thresholds. For the 2021 tax year, the income limits are as follows:
- Single filers: Phase-out begins at $75,000, fully phased out at $95,000
- Married couples filing jointly: Phase-out begins at $150,000, fully phased out at $170,000
- Head of household filers: Phase-out begins at $112,500, fully phased out at $132,500
Phase-Out of the Child Tax Credit
For families with MAGIs above the phase-out thresholds, the CTC is gradually reduced. The credit is reduced by $50 for every $1,000 (or part thereof) of MAGI above the phase-out threshold. This means that families with MAGIs just above the threshold may still receive a partial CTC.
Calculating the Child Tax Credit
To calculate the CTC, families must first determine their MAGI. MAGI is calculated by taking the adjusted gross income (AGI) from their tax return and adding back certain deductions and exclusions. The IRS provides a worksheet to help families calculate their MAGI.
Once the MAGI is determined, families can use the following table to calculate their CTC:
| MAGI | CTC Amount |
|---|---|
| Below phase-out threshold | $3,600 per qualifying child under age 6<br>$3,000 per qualifying child ages 6-17 |
| Within phase-out range | Reduced by $50 for every $1,000 (or part thereof) of MAGI above the phase-out threshold |
| Above phase-out threshold | No CTC |
Eligibility for the Child Tax Credit
In addition to meeting the income limits, families must also meet the following eligibility criteria to claim the CTC:
- The child must be under the age of 18 at the end of the tax year.
- The child must be a U.S. citizen, U.S. national, or resident alien.
- The child must live with the taxpayer for more than half the year.
- The taxpayer must provide more than half of the child’s support.
The income limits for the 2021 Child Tax Credit play a crucial role in determining the amount of the credit that families can claim. By understanding these limits and how they impact the calculation of the CTC, families can ensure that they are receiving the maximum tax benefit available to them.
2023 Child Tax Credit Simplified
FAQ
What are the thresholds for the 2021 Child Tax Credit?
Why am I not getting the full Child Tax Credit?
What is the $3600 Child Tax Credit?
How much do you have to make to get earned income credit?
How much is a child tax credit 2021?
For 2021, the credit amount is: $3,000, for qualifying children between age 6 to 17 years old $3,600, for qualifying children age 5 and under. The increased amounts are reduced (phased out), for modified adjusted gross income (AGI) over: $150,000 for married taxpayers filing a joint return and qualifying widows or widowers,
Can I claim additional child tax credit on MY 2021 tax return?
If you are entitled to the Additional Child Tax Credit you can claim it on your original or amended 2021 Tax Return. The American Rescue Plan Act of 2021 made important changes to the Child Tax Credit (CTC) for tax year 2021 only. What do I need to know? The credit amounts will increase for many taxpayers.
How much is a child tax deductible 2021?
Children under 6: $3,600 for each child (split among six monthly payments of $300 per qualifying child and then $1,800 claimed on your 2021 tax return). Children 6 to 17: $3,000 for each child (or six monthly payments of $250 per qualifying child and then $1,500 claimed on your 2021 tax return). Estimating your CTC requires simple math.
Who qualifies for the 2023 child tax credit?
You qualify for the full amount of the 2023 Child Tax Credit for each qualifying child if you meet all eligibility factors and your annual income is not more than $200,000 ($400,000 if filing a joint return). Parents and guardians with higher incomes may be eligible to claim a partial credit.