The Child Tax Credit is the primary tax credit for families with children. While not a direct cash assistance payment, this credit helps offset costs associated with raising kids by reducing the amount of income tax you owe. The maximum Child Tax Credit you can receive for the 2021 tax year is $3,600 per qualifying child under the age of 17.
However, if you do not have a high enough income tax to benefit from the Child Tax Credit fully, you may be eligible to receive the Additional Child Tax Credit instead, so long as your income was at least $2,500. For 2021 tax returns, this refundable credit can be worth up to $3,600.
To provide more significant family tax relief and financial assistance for the COVID-19 pandemic, the IRS offers families the opportunity to receive advance payments of the credit. However, you must meet the following requirements to qualify:
- You claimed the Child Tax Credit on your filed 2021 tax return, or
- You provided the IRS with your information in 2021 to receive the Economic Impact Payment using the Non-Filers: Enter Payment Info Here tool on the IRS website.
And, these are further requirements:
- You’ve lived primarily in the United States for at least half a year or filed jointly with a spouse who did
- You had a qualifying child who is 17 years of age or younger who has a valid Social Security number at the end of the 2021 year
- You meet income-based restrictions
So, if you qualify to receive this tax credit for families, the IRS will automatically provide you with your payment.
In addition, you may be eligible for additional family tax relief credits such as:
Working Family Household and Dependent Care Credit: This refundable working family credit helps low and moderate-income families care for their children and dependents while working or searching for employment. To qualify, you must meet income-based criteria, and either you or your spouse must be working, or looking for work (or attending school if you are single). Additionally, you can receive the credit if one spouse is working and the other is attending school or disabled.
Child and Dependent Care Tax Credit: You can earn this non-refundable tax credit for families if you have at least one child under the age of 13 that you paid to be cared for so that you could work or look for work.
Earned Income Tax Credit: The Earned Income Tax Credit is a refundable credit for low-income people that have earned income through wages, farming, or self-employment but meet income-based criteria. Having children means that you can qualify for a larger Earned Income Tax Credit.