Who qualifies as a dependent for the revised child tax credit? It’s complicated


Will your kids count toward the 2021 child tax credit, and for how much?

Angela Lang/CNET

Your kids could bring in thousands of dollars if they meet the age requirement for the new child tax credit and if you qualify. (You can calculate how much you’ll get here.) The age eligibility guidelines are different from the dependent qualifications for the third stimulus check. With the new child tax credit, the older the child is, the less money the household will get. We’ll explain how it works based on what we know so far. 

The first of the child tax credit payments will be sent in July, with monthly disbursements through December — the rest of the payment will arrive next year. (If you’d rather get one large payment, you can opt out of receiving monthly payments.) Parents of babies born or adopted in 2021 can also receive the checks this year. You can get up to $3,600 per qualified child, depending on the child’s age and your adjusted gross income (AGI). For example, if you have a single income of less than $75,000 and you have one child younger than 6, you’ll qualify for $3,600.

The IRS should release more details as the date approaches for the first child tax credit payment. In the meantime, here’s how President Joe Biden’s next stimulus bill could bring even more money and what we know about a possible fourth stimulus check and student loan forgiveness. This story has been updated.

Kids 17 and younger are eligible for child tax credit money

If you have dependents who are 17 years of age or younger, they can each count toward the new child tax credit (CTC). However, the amount they’re eligible for depends on their age. Kids between the ages of 6 and 17 will count for up to $3,000 each. Kids who are under the age of 6 can count for up to $3,600 each.

The prior child tax credit offers families $2,000 per kid age 16 and younger, so adding an additional $1,000 to $1,600 per kid can significantly help families financially. Plus, the new CTC adds 17-year-olds to the mix.

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Dependents between 18 and 24 qualify toward a partial payment

If you have 18-year-old dependents, they can qualify for up to $500 each toward the child tax credit amount you’ll receive. If you have a dependent between the age of 19 and 24 who is attending college full-time, they can also qualify for up to $500 each toward your total amount, per the new stimulus bill. 

Babies born this year also qualify for money

If you’re expecting your baby to arrive before the end of 2021, the newborn will also qualify for up to $3,600 toward the child tax credit. This includes children who are adopted, assuming they’re US citizens (more below). You’ll likely be able to use the IRS portal once it’s available to update your information to add your new family member or you can claim the tax credit when you file your 2021 tax return next year, according to Garrett Watson, a senior policy analyst at Tax Foundation. While it’s unclear when the portal will open, it’s likely to be up by July, when the IRS is expected to send the payments. 

What to know about dependents with disabilities

Children with disabilities can qualify for the child and dependent care credit separately from the child tax credit, Watson said. You may be able to claim this credit if you paid expenses for the care of a qualifying dependent to enable you to work, per the IRS. Watson says the child tax credit would apply similarly to children with disabilities.

If you share custody of a dependent, here’s what you need to know about the child tax credit

“Double-dipping” benefits for the same child worked for the first two stimulus checks, where a loophole entitled unmarried parents who share custody to both claim the child as a dependent, in a specific situation. That isn’t the case with the 2021 child tax credit. In fact, overpayment could result in you being asked to return the money to the IRS.

The dependent must live with you for at least half of the year

If you’re claiming the new child tax credit for your child, note that they must live with you at least six months out of the year. There are exceptions to this rule, though, including temporary absences. According to the IRS, “A person is considered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances,” including illness, education, business, vacation and military service.

Also, a newborn child born later in the 2021 year is included in the exception and will be considered as living with you for the entire year. However, the IRS will be working off the 2020 tax return, which will not have children born in 2021 listed, according to Joanna Powell, Certified Financial Planner and managing director at CBIZ, so remember to update your information in the portal.

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More requirements your child must meet

If your child isn’t a US citizen and doesn’t have a Social Security number, there’s no way around this one: They don’t qualify. When you file your individual income tax return (Form 1040), you’re required to list your dependents and their Social Security numbers when you’re claiming them for the child tax credit. 

This includes adopted children. An adopted child who isn’t a US citizen and has an ATIN or ITIN (adopted/individual taxpayer identification number) won’t qualify for the child tax credit, per the IRS. “The child must have an SSN to be a qualifying child eligible for the child tax credit.”

This is unlike the third stimulus check, where mixed-status households could receive a check and only one member of the household needed to have a Social Security number.

For more information, here’s everything to know about the 2021 child tax credit, when the CTC payments will come and qualifications for parents to receive the payments.

source: cnet.com