What is the ERC Child Tax Credit?

The ERC child tax credit is a tax credit that was expanded under the American Rescue Plan Act that was passed in March 2021. For the tax year 2021, the child tax credit provides eligible families up to $3,600 per child under age 6 and up to $3,000 per child ages 6 to 17. This is an increase from the previous amount of $2,000 per child under 17. The American Rescue Plan increased the child tax credit for 2021 only.

The ERC child tax credit aims to help working families cover the costs of raising children. Families can receive advance payments of the credit in 2021 or claim the full amount when filing their 2021 taxes in 2022. The credit is fully refundable for 2021, meaning eligible families can receive the credit even if they owe no federal income tax. Overall, the expansion of the ERC child tax credit will provide financial assistance to millions of families with children across the United States.

How much is the child tax credit for 2021?


For the tax year 2021, the ERC child tax credit provides families up to $3,600 per child under age 6 and up to $3,000 per child ages 6 to 17. In total, the maximum credit amounts are:

$3,600 per child under 6
$3,000 per child ages 6-17
So for example, a family with two children under 6 and one child age 8 would be eligible for a maximum child tax credit of $10,200 for 2021. This includes:

$3,600 x 2 for the two kids under 6 = $7,200
$3,000 for the one child age 8 = $3,000
To summarize:

1 child under 6: $3,600 maximum credit
1 child aged 6-17: $3,000 maximum credit
2 children under 6: $7,200 maximum credit
1 child under 6 + 1 child 6-17 years: $6,600 maximum credit
2 children ages 6-17 years: $6,000 maximum credit
The actual amount of ERC child tax credit a family can claim depends on their income and taxes owed. But in general, the maximum total credit in 2021 is up to $3,600 per child under 6 and $3,000 per child 6-17 years old. This is a substantial increase from the previous $2,000 per child maximum.

Who Qualifies for the ERC Child Tax Credit 2021?

The expanded ERC child tax credit for 2021 is available to families who meet the following requirements:

Have a child under age 18 at the end of 2021 who has a valid Social Security number
Have adjusted gross income (AGI) below certain limits:
$75,000 for single filers
$112,500 for heads of household
$150,000 for married couples filing jointly
Have a principal place of residence in the United States for more than half of 2021
The full credit is available to joint filers with AGIs under $150,000 and all other filers with AGIs under $75,000. Above those income limits, the credit phases out by $50 for every $1,000 in additional AGI.

It is important to note the ERC child tax credit is refundable for 2021. This means if the credit exceeds taxes owed, families can still receive the remaining amount as a tax refund. Previously, the refundable portion was limited to $1,400 per child. The higher income phase-outs also ensure middle-class families can benefit from the credit in 2021.

Overall, the expanded eligibility requirements mean the vast majority of U.S. families with children under 18 are qualified for the higher ERC child tax credit in 2021. The credit provides financial assistance to families ranging from lower-income to middle-class households.

How do I claim the ERC child tax credit on my 2021 taxes?

To claim the expanded ERC child tax credit for 2021, families need to file a 2021 federal income tax return even if they normally do not file. The best way to claim the credit is to file a Form 1040 tax return for 2021.

When filing, make sure to include Schedule 8812 (Credits for Qualifying Children and Other Dependents) with your completed return. This form is used to calculate the amount of child tax credit you can claim.

To receive advance child tax credit payments during 2021, families needed to file a 2020 tax return or use the IRS Non-filer Sign-up Tool. But if you missed the advance payments, you can still get the full 2021 credit by filing a tax return for 2021.

Here are some key pointers for claiming the credit:

Accurately report your adjusted gross income (AGI)
Confirm your filing status and number of dependents
Provide valid Social Security numbers for all dependents
Sign your return and file by the tax deadline (April 15, 2022, for most families)
The IRS will use the income and household information on your return to determine the amount of ERC child tax credit you can claim. If you are owed a refund, you should receive it within 21 days of filing electronically. Just be sure to double-check your return for accuracy before submitting it.

Filing a 2021 tax return will ensure you get the full enhanced child tax credit if you qualify, even if you did not receive any advance payments in 2021. Consult a tax professional if you need assistance preparing your taxes.

Can I still claim the ERC child tax credit for 2021?

Yes, you can still claim the expanded ERC child tax credit for 2021, but you need to file a 2021 tax return to do so. The deadline for filing your 2021 taxes is April 15, 2022.

Even if you did not receive any advance child tax credit payments in 2021, you can get the full credit amount you qualify for by filing a tax return and claiming the credit. The total credit available in 2021 is up to $3,600 per child under age 6 and $3,000 per child ages 6-17.

To get the credit, you need to file IRS Form 1040 and include Schedule 8812 with your return. Be sure to follow the instructions and accurately calculate the child tax credit that applies to your family based on your income and number of eligible dependents.

The IRS will use your 2021 return information to determine your final child tax credit amount. As long as you file by the tax deadline and meet the income and eligibility requirements, you can claim the full enhanced credit.

Some key tips:

File electronically and request direct deposit for any refund
Double-check your return for accuracy before submitting
Save tax records including any letters from the IRS on advance payments
Seek help from a tax professional if you need assistance
Even if you do not normally file taxes, you should submit a return to claim the 2021 child tax credit if you qualify. This credit provides substantial financial assistance to families – up to $3,600 per child under 6. Don’t miss out on this expanded opportunity to get more money back. File your taxes by April 15, 2022.

Do I have to pay back the ERC child tax credit?

No, families will not have to pay back the 2021 expanded ERC child tax credit payments they properly claimed based on their tax situation. The total credit amount is determined when you file your 2021 taxes.

If you received advance child tax credit payments in 2021, you will need to compare that amount to the credit you can claim on your 2021 return. As long as you qualify for the payments based on your household size and income, you do not have to pay back the money.

For example, if you received $3,000 in advance but can claim $3,600 based on your 2021 tax return, you will get the additional $600 when you file. Or if you got $3,600 in payments but only qualify for $3,000 based on your 2021 income, you do not have to repay the $600 difference.

There are a few instances when families may have to repay some credit amounts, such as:

Your income increased above the phase-out in 2021
You claimed more dependents than allowed
Your custody situation changed for a dependent child
In these cases, the IRS may send a notice saying you need to repay excess credit amounts received. But in general, properly-claimed 2021 child tax credits do not need to be repaid or reconciled on your tax return.

The extra money families receive from the expanded credit will provide help buying food, clothing, school supplies, and other essentials for raising children. As long as you qualify based on your tax situation, you can keep all the advance payments without worry.

Is the ERC Child Tax Credit Refundable for 2021?

Yes, the expanded ERC child tax credit that was first implemented in 2021 is refundable again for the 2022 tax year. Families can claim the credit when they file their 2022 taxes in 2023.

For 2022, the child tax credit provides:

Up to $3,600 per child under age 6
Up to $3,000 per child ages 6 to 17
This maintains the higher credit amounts from the American Rescue Plan Act that were in effect for 2021. However, the credit for 2022 is only extended through the end of this year.

Key features of the extended 2022 credit include:

The full credit amounts are available to taxpayers with incomes up to $200,000 for single filers and $400,000 for joint filers.
The credit begins to phase out above those income limits.
The credit is fully refundable so families receive any amount exceeding taxes owed.
Families can opt out of receiving advance payments.
In summary, the temporarily expanded child tax credit enacted in 2021 is still in place for 2022 tax returns. Eligible families can claim up to $3,600 per child under 6 when they file their 2022 taxes in 2023. And the full amount is refundable to provide assistance even to lower-income households.

Will There be an ERC Child Tax Credit in 2022?


For the expanded ERC child tax credit in 2021, the full credit amounts begin to phase out at the following adjusted gross income (AGI) limits:

Single filer: phases out above $75,000 in AGI
Head of household: phases out above $112,500 in AGI
Married filing jointly: phases out above $150,000 in AGI
Above those AGI limits, the child tax credit amount is reduced by $50 for every additional $1,000 of modified AGI. This phased reduction ensures middle-class families can benefit from the credit while limiting benefits for higher earners.

For example:

A married couple with an AGI of $160,000 would see their credit reduced by $500 since their income exceeds the $150,000 phase-out limit by $10,000.
A single parent with an AGI of $85,000 would get $1,500 less in child tax credits because their income is $10,000 above the $75,000 phase-out threshold.
Once AGI reaches:

$200,000 for single filers
$400,000 for joint filers
The credit is reduced to $2,000 per child, which is the previous pre-expansion amount.

In summary, the income phase-out ranges aim to extend the benefits of the larger ERC child tax credit to middle-class American families while limiting the credit for higher-income taxpayers. Families earning up to $150,000 as joint filers or $75,000 as single filers can claim the full enhanced credit if they meet other eligibility requirements.

What is the income limit for the ERC child tax credit 2021?

The expanded ERC child tax credit for 2021 can have a substantial impact on a family’s tax refund amount when they file their return. For eligible families, the higher credit may result in a larger tax refund or lower tax liability.

Here are some key ways the expanded 2021 child tax credit can affect refunds:

Families may get a bigger refund if the total credit from their 2021 return exceeds the amount of child tax credit payments they already received last year.
Even families who don’t work and have no earned income can qualify for the credit and a refund because the credit is fully refundable for 2021.
The credit can help offset any taxes owed and potentially result in a larger refund since up to $3,600 per child under 6 is available for 2021 filers.
However, some families that received larger advance payments than they qualify for based on their 2021 return may get a smaller refund.
Families opting out of advance payments in 2021 can claim the entire credit and maximize their refund.
The credit may result in a first-time refund for low-income families with children who previously owed no tax.
In summary, eligible families may see substantially larger 2021 federal tax refunds thanks to the expansion of the child tax credit. Even those who don’t work can get a refund based on this credit. But the specific impact depends on your tax situation for 2021. Consult a tax professional to understand how advance payments and expanded credit affect your refund.

How does the ERC child tax credit affect my tax refund?

How does the expanded ERC child tax credit for 2021 affect my tax refund amount? The amount of credit you qualify for when filing your 2021 return will impact your tax refund or tax owed in several ways:

If you received advance payments in 2021 that exceed the credit amount on your return, your refund will be reduced by that excess amount. You do not have to repay excess payments, but they do lower your refund.
If the credit you can claim exceeds the payments received, you will get the difference as an additional refund when filing. This could result in a larger refund.
For low-income families who owe no federal tax, the refundable credit results in a larger refund because you still get the credit even with no tax liability.
If you opt out of advance payments, your refund will be maximized by claiming full credit on your return.
For middle- to high-income families, the credit may help offset taxes you owe and result in less tax liability but not necessarily a larger refund.
Any change in household size or income from 2020 to 2021 can also impact the final credit amount on your return.
In summary, properly claiming the 2021 child tax credit can increase tax refunds, especially for lower- and middle-income families who qualify for the enhanced, refundable credit. Compare the total credit on your return to the payments received to determine the impact on your refund. Consult a tax professional if you have questions.

Links to related resources:

https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-j-reconciling-your-advance-child-tax-credit-payments-on-your-2021-tax-return

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