For 2021, the American Rescue Plan Act has made changes to the credit for child tax credit calculated on Schedule 8812.
- Children aged 17 are now eligible for the child tax credit (previously the child had to be under 17)
- The credit is extended to residents of Puerto Rico and U.S. Territories
- Taxpayers no longer must have earned income or any income to qualify for the child tax credit
- Maximum child tax credit has been significantly increased:
- The credit is fully refundable
- Maximum credit of $3,600 for children under age 6
- Maximum credit of $3,000 for children ages 6 to 17
- Taxpayers living abroad for more than half of the year are not eligible to the increased credit amounts, but will still be eligible to claim the lower amount ($2,000 per child)
- The American Rescue Plan Act permanently repealed the eligibility restrictions on residents of Puerto Rico. For 2021, residents of Puerto Rico have the same eligibility requirements for claiming the child tax credit:
- No earned income is required
- Credit increased to $3,600 for children under age 6 and $3,000 for children ages 6 - 17
- No requirement for residents of Puerto Rico to have three or more qualifying children
Many taxpayers qualified to receive advance payments of their expected 2021 Child Tax Credit. The advance child tax credit payments must be reconciled on the 2021 tax return.
Additional Information: