In this YouTube video, Travis Sickle talks about the 2021 child tax credit. It can be confusing to understand if a person isn’t familiar with the rules. The Advanced Child Tax Credit has changes that are important to watch.
The tax credit is fully refundable.
Before, this was not the case. If a person owes $3,000 to the IRS when all said is done, the $3,000 credit will wipe out that liability if they have one qualifying child. Because of this, everyone must file their yearly tax return to avoid leaving potential credits on the table.
Previous to 2021, only children under the age of 17 were eligible. For the 2021 tax year, 17 years olds are now eligible under the advanced tax credit and not only under the dependent credit.
The phase-out amounts have dropped depending on how much a person’s adjusted gross income is. Only part of the refund amount is eligible for the phase-out. The base amounts are unaffected by the change.
The child tax credit can go up to $3,000 or up to $3,600 based on how old each child is on December 31. These are advanced payments. If a person’s taxes are not calculated correctly, a person may need to pay these payments back. It’s always essential to look at taxes throughout the year to ensure a person stays on track.