On Monday, January 24, 2022, the Internal Revenue Service (IRS) updated their live sight designed to help families get the remaining part of their 2021 CTC.
The CTC has been federal law since the mid-1990s, but last year’s expansion added several improvements that lifted approximately half of children out of poverty. It did that by making the tax “refundable’ meaning families could benefit even if they did not have enough “earned-income.’ It also added an innovation to make it more immediate: have the IRS issue the tax refunds each month. This new benefit was for the entire year, but it did not start until July 2021 and thus all families are eligible for the CTC from January through June.
This can potentially benefit “child welfare families.” If you were a foster parent for the same child or children for more than six months you can qualify for the credit (just as you used to be able to receive the child tax deduction if you cared for the child for more than half the year). You do need a Social Security number for the child, so you need to obtain that from the agency or caseworker.
Qualifying parents and guardians with qualifying children for the 2021 Child Tax Credit payments are made to eligible parents and guardians based on the number of qualifying children they have. Payment amounts for each qualifying child depend on the child’s age and the parent’s annual income.
The maximum CTC ($3600 for a child under 6 and $3000 for a child 6 through 17) parents can receive is based on annual income. You should receive the full amount of the 2021 CTC for each qualifying child if you meet all eligibility factors and your income is not more than:
$150,000 for a person who is married and filing a joint return;
$112,500 for a family with a single parent (also called Head of Household); and
$75,000 for a single filer or a person who is married and filing a separate return.
If you are above these levels, you can still receive a CTC at less than the maximum totals.
For a child to qualify for the CTC, they must:
- Not have turned 18 before January 1, 2022;
- Be your own child, adopted child, stepchild, or foster child. You can claim a sibling, step-sibling, half-sibling, or a descendent of any of them (niece, nephew, or grandchild);
- Have lived with you for more than half of 2021;
- The child must not have paid more than half their own expenses; and
- The child must be a U.S. Citizen, U.S. national, or U.S. resident alien.
A child born or added to your family (including adoption) in 2021 can be a qualifying child for the full 2021 Child Tax Credit, even if you did not receive monthly CTC payments in 2021. You will receive the full amount of the CTC you are eligible for when you file your 2021 tax return.
To qualify for the CTC, your child must have a Social Security Number (SSN) that is “valid for employment.” An SSN is “valid for employment” if your child can legally work in the United States, even if they are currently too young to work or do not work. This means an adopted child with an Adoption Taxpayer Identification Number (ATIN) cannot qualify for this CTC although they can qualify for other child-based tax credits using the ATIN.
If your child’s Social Security card has the words “NOT VALID FOR EMPLOYMENT” on it then you cannot claim the Child Tax Credit for them. If those words do not appear on your child’s Social Security card, and their immigration status hasn’t changed since it was issued, then your child’s SSN is valid for employment.
Families who adopt can qualify for the CTC but again the parents must have a Social Security number for that child. Families who adopt a child but who do not have a Social Security number for that child for various reasons, can still apply to the IRS for an “ATIN” or Adoption Taxpayer Identification Number. Unfortunately, due to changes made to the CTC tax law under more recent tax reforms before the pandemic, adoptive families cannot use the ATIN to claim this credit (the ATIN can be used for other child-related tax credits).
An ATIN is issued by the Internal Revenue Service as a temporary taxpayer identification number for the child in a domestic or foreign adoption where the adopting taxpayers do not have and/or are unable to obtain the child’s Social Security Number (SSN). Parents can apply for an ATIN if they have made a reasonable attempt to obtain it from the birth parents, the placement agency, and other persons, and the adoptive parents are unable to obtain an SSN for the child from the Social Security Administration (SSA).
If a parent made little or no income last year—they are still eligible for the CTC but must file a tax return to get it. Parents who did not receive the monthly payments by their own choice or because they failed to adjust through the IRS website will need to file a tax return to get their entire 2021 CTC payment. One child under age 6, may result in a $3600 credit and $3000 a child if the child is 6 through 17 years.
Parents should also file their tax return to claim new babies who were born in 2021 or any other children for whom they didn’t get advance payments in 2021. Even if a baby was born as late as December 2021, that baby would still be eligible for the full $3,600 CTC payment when their family files a 2021 tax return.
The permanent CTC that CWLA and other groups are fighting for would allow the credit monthly and allow that credit to be moved with the child but that is not how the 2021 version operated because it was a modification of existing law—thus the problem with not allowing adoptions with an ATIN to qualify. In addition to going online to: ChildTaxCredit.gov (which includes the Get Your Child Tax Credit and Check Your Eligibility), options for tax assistance include:
- IRS Free File (available to people whose income was $72,000 or less in 2021).
- IRS’s Volunteer Income Tax Assistance (VITA) (generally available to people who make $57,000 or less, those who have disabilities, and those who speak limited English).
- MyFreeTaxes; and
Tax filing season started on January 24, 2022. The filing deadline is Monday, April 18, 2022, for most taxpayers. The IRS anticipates most taxpayers will receive their refund within 21 days of when they file electronically if they choose direct deposit and there are no issues with their tax return. To avoid delays in processing, people should avoid filing paper returns when possible.
Residents of Puerto Rico Get the CTC
The March 2021 American Rescue Plan signed by President Biden, expanded the CTC in another way by making residents of Puerto Rico eligible to receive the same expanded Child Tax Credit as residents of the 50 States or the District of Columbia—$3,600 per qualifying child under age 6 and $3,000 per qualifying child age 6 to 17. Previous versions of the CTC required a resident of Puerto Rico to have at least three qualifying children to be eligible for the Child Tax Credit. Residents of Puerto Rico now need only one qualifying child to claim the Child Tax Credit.
For residents of Puerto Rico, it is really important to apply because residents were not eligible to receive advance monthly payments of the CTC last July through December. But residents are now eligible to receive the full amount of Child Tax Credit they are eligible for by filing a 2021 U.S. federal income tax return during this 2022 tax filing season.