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Grandparents And Other Relatives May Qualify For The 2021 Child Tax Credit

The Internal Revenue Service is reminding families that some taxpayers who claim at least one child as their dependent on their tax return may still be eligible to claim the expanded Child Tax Credit (CTC).

Eligible taxpayers who received the advance Child Tax Credit payments last year should file a 2021 tax return to receive the second half of the credit. Those who did not receive advance Child Tax Credit payments last year may still be eligible to claim the full credit by filing a 2021 tax return.

The IRS urges grandparents, foster parents, or those caring for siblings and/or other relatives to check their eligibility to receive the 2021 Child Tax Credit. Even if they haven’t qualified in the past, eligible taxpayers may now be able to claim the credit. If you think you may qualify for this credit, be sure to review the eligibility rules below and file a 2021 federal tax return.

What Is The Child Tax Credit Expansion?

The Child Tax Credit expansion, which is a part of the American Rescue Plan, increased the amount of money per child a family can receive. It also expanded who can receive the payments.

Under the American Rescue Plan, the Child Tax Credit increased from $2,000 to $3,600 per child for children under the age of six. It also increased the amount from $2,000 to $3,000 for children at least age 6 and raised the age limit from 16 to 17 years old.

These changes apply only to tax year 2021.

Who Qualifies For The Child Tax Credit?

Taxpayers can claim the Child Tax Credit for each qualifying child who has a Social Security number (SSN) that is valid for employment in the United States and was issued before the due date of their tax return (including an extension if the extension was requested by the due date).

To be a qualifying child for the 2021 tax year, the dependent generally must:

  • Be younger than 18 at the end of the year.
  • Be the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece, or nephew).
  • Provide no more than half of their own financial support during the year.
  • Have lived with the taxpayer for more than half the year.
  • Be properly claimed as a dependent on the taxpayer’s tax return.
  • Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid.
  • Have been a U.S. citizen, U.S. national, or U.S. resident alien.

Expanded CTC Income Requirements

Taxpayers qualify for the full amount of the 2021 Child Tax Credit for each qualifying child if they meet all eligibility factors and their annual income is not more than:

  • $150,000 (married and filing a joint return, qualifying widow or widower)
  • $112,500 ( head of household)
  • $75,000 (single filer or married filing separately)

Parents and guardians with higher incomes may be eligible to claim a partial credit. Claiming these benefits may result in tax refunds for many individuals. Individuals should file electronically and choose direct deposit to avoid delays and receive their refund faster.

IRS Sending Letters to Eligible Taxpayers

The IRS is sending letters to more than 9 million individuals and families who appear to qualify for a variety of key tax benefits but did not file a 2021 federal income tax return. Many in this group may be eligible to claim some or all of the 2021 Recovery Rebate Credit, the Child Tax Credit, the Earned Income Tax Credit, and other tax credits. The special reminder letters will be arriving in mailboxes over the next few weeks. The letter, printed in both English and Spanish, provides a brief overview of each of these three credits.

These and other tax benefits were expanded under last year’s American Rescue Plan Act and other recent legislation. The only way to get the valuable benefits, however, is to file a 2021 tax return. 

2021 Tax Filing Options

For those who aren’t required to file a 2021 federal income tax return but wish to receive the expanded Child Tax Credit, we strongly recommend using Free File. IRS Free File is available until November 17, 2022. If you earned less than $73,000 (single filer) in 2021, there is no cost to use this service. There’s also no penalty for refunds claimed on a tax return filed after the April 15, 2022 deadline. Low-income taxpayers may also qualify for free tax preparation services through the Volunteer Income Tax Assistance (VITA) program.

If you aren’t eligible for free tax assistance and need help filing a late tax return, please contact MoneySolver at 855-476-6920. We offer free tax consultations and provide affordable tax preparation services.