What Is the 2021 Child Tax Credit Amount

Families with children have always been a top priority for any government looking to ensure the well-being and future success of its citizens. Recognizing the financial burden that raising children can pose, many countries offer various forms of financial support to alleviate the expenses. In the United States, one such support is the Child Tax Credit.

The Child Tax Credit is a tax benefit provided by the U.S. government to help families with dependent children reduce their tax liability. It is a means of giving families a little extra financial breathing room and ensuring that every child has access to the resources they need to thrive.

As we enter 2021, the Child Tax Credit has undergone significant changes. Thanks to the American Rescue Plan Act (ARPA) passed in March, the credit has been expanded and made more accessible to low-income families. The changes implemented by the ARPA are aimed at providing targeted relief to families struggling due to the ongoing COVID-19 pandemic.

So, what is the 2021 Child Tax Credit amount? Under the new legislation, eligible families may receive up to $3,600 for each child under the age of six and up to $3,000 for each child between the ages of six and seventeen. Previously, the maximum credit amount was $2,000 per child.

It is important to note that the increase in the Child Tax Credit is not universal. The full amount is available to families with a modified adjusted gross income (AGI) of up to $75,000 for single filers, $112,500 for heads of household, and $150,000 for married couples filing jointly. Above these income thresholds, the credit gradually phases out until it reaches $2,000 per child for those with an AGI of $200,000 for single filers and $400,000 for married couples filing jointly.

Another significant change brought about by the ARPA is that the Child Tax Credit is fully refundable for 2021. This means that eligible families will receive the full amount of the credit, even if it exceeds their tax liability. It effectively transforms the credit into a direct payment to families, providing much-needed financial support, especially for those with little or no tax liability.

To help families with more immediate financial needs, the ARPA also allows for advance payments of the Child Tax Credit. Starting in July 2021, eligible families will receive monthly payments of up to $300 per child under the age of six and up to $250 per child between the ages of six and seventeen. These payments will be sent automatically to eligible families based on their 2020 tax return information or their 2019 tax return if their 2020 information is not yet available.

The increase and expansion of the Child Tax Credit in 2021 are expected to have a profound positive impact on millions of families across the nation. It will help alleviate some of the financial burdens they face, providing much-needed resources to support their children’s well-being and development.

However, it is important for families to stay informed and ensure they meet all the eligibility requirements to receive the full benefits of the Child Tax Credit. To determine eligibility and calculate the amount of credit they may qualify for, families are encouraged to consult the official Internal Revenue Service (IRS) guidelines or seek assistance from a tax professional.

In conclusion, the 2021 Child Tax Credit amount has been increased and expanded to provide crucial financial support to families with dependent children. With new eligibility thresholds, a fully refundable credit, and advance payments, the Child Tax Credit aims to help families navigate the challenges of raising children and ensure the well-being and future success of the nation’s youth.