The 2021 tax deadline is fast approaching–save the date, it’s on April 18 this year. But for parents who got an advance on the child tax credit (thanks to the American Rescue Plan), confusion reigns. So, what can you expect on this year’s return and how will those early payments affect your refund? We turned to Lisa Greene-Lewis, CPA and tax expert at TurboTax, for help.
First, Here’s Exactly How the Child Tax Credit Changed in 2021
As we mentioned, the Child Tax Credit provided a necessary and critical boost to American families in 2021 via the American Rescue Plan, the COVID-19 relief package that was passed by Congress in March of last year.
Prior to 2021, the child tax credit provided families with kids ages 0 to 16 with up to $2,000 per qualifying dependent. In 2021, this tax credit was increased to provide a maximum of $3,600 per qualifying dependent for ages 0 to 6 and a maximum of $3,000 per qualifying dependent for ages 7 to 17. (This is also the first year that 17-year-olds were included in the child tax credit.)
Eligibility for the child tax credit also changed, making the following folks eligible: single filers with income up to $75,000, heads up household with income up to $112,500 and people married and filing jointly with income up to $150,000. (The credit begins to phase out for anyone making more than those thresholds.) This is significant because, previously, low-earners—in particular those along the poverty line—were only eligible to receive part…
