What is the Additional Child Tax Credit?

What’s New Schedule 8812 (Form 1040) for 2021. The Schedule 8812 (Form 1040) and its instructions have been revised to be the single source for figuring and reporting the child tax credits and credit for other dependents. The instructions now include all applicable worksheets for figuring these credits. As a result, Pub. 972 will not be revised. For prior year versions of Pub. 972 go to IRS.gov/Pub972. Enhanced child tax credit. For 2021, the child tax credit applies to qualifying children who have not attained age 18 by the end of 2021. Also, the initial amount of the child tax credit is increased to $3,600 for each qualifying child who has not attained age 6 by the end of 2021 and $3,000 for each other qualifying child who has not attained age 18 by the end of 2021. The credit for other dependents has not been enhanced. Simplified refundable child tax credit. If you meet certain residency requirements, your child tax credit will be fully refundable even if you received no income. If you do not meet the residency requirements, you will figure your child tax credit and additional child tax credit in a manner similar to how these credits were figured for 2020. Letter 6419. If you received advance child tax credit payments during 2021, you will receive Letter 6419. Keep this letter with your tax records. You will use the information in this letter to figure your child tax credit on your 2021 tax return or the amount of additional tax you must report on Schedule 2 (Form 1040). Additional tax on excess advance child tax credit payments. If you received advance child tax credit payments during 2021 and the credits you figure using Schedule 8812 are less than what you received, you may owe an additional tax. Complete Schedule 8812 to determine if you must report an additional tax on Schedule 2 (Form 1040).

This credit is for certain people who have at least one qualifying child for the child tax credit (as defined in Steps 1, 2, and 3 in the Who Qualifies as Your Dependent section, earlier). The additional child tax credit may give you a refund even if you don’t owe any tax or didn't have any tax withheld.

For tax year 2021, the Child Tax Credit is increased from $2,000 per qualifying child to:

• $3,600 for children ages 5 and under at the end of 2021; and
• $3,000 for children ages 6 through 17 at the end of 2021.

Note: The $500 nonrefundable Credit for Other Dependents amount has not changed

If you were not allowed the full child tax credit per qualifying childon the tax return (1040), you may be eligible for an Additional Child Tax Credit. The Additional Child Tax Credit is not really an additional credit, but rather the refundable portion of the the Child tax credit amount that was not used to reduce your tax due. (ex. You have one child, your maximum child tax credit is $3000 (or $3600 if under age 5).  but you have only $500 tax due on your return.  You will recieve $500 CHILD TAX CREDIT on the return and if you qualify, you will then see the remaining $2500 of the credit on the ADDITIONAL CHILD TAX CREDIT line of the form.)  However, the total of the child tax credit and the additional child tax credit will not be more than $3000 per child (or $3600 if under age 5).

Please open your 1040 to review this section for clarification. 

This credit is for certain people who have at least one qualifying child as defined below:

A qualifying child for purposes of the child tax credit and additional child tax credit is a child who:

• Is claimed as your dependent on line 6c, and
• Was under age 18 at the end of the tax year, and
• Is (a) your son, daughter, adopted child, stepchild, grandchild; (b) your brother, sister, stepbrother, stepsister, or a descendant of your brother, sister, stepbrother, or stepsister (for example, your niece or nephew), whom you cared for as your own child; or (c) a foster child (that is, any child placed with you by an authorized placement agency whom you cared for as your own child), and
• Is a U.S. citizen or resident alien.

Note: The above requirements are not the same as the requirements to be a qualifying child for the earned income credit.

A child placed with you by an authorized placement agency for legal adoption is an adopted child even if the adoption is not final. An authorized placement agency includes any person authorized by state law to place children for legal adoption.

A grandchild is any descendant of your son, daughter, adopted child, or stepchild and includes your great-grandchild, great great-grandchild, etc.

If you meet these guidelines and are eligible, our program will automatically figure this for you and fill out the appropriate forms based on the answers you provided during the interview.