Child Tax Credit
The full amount of the Child Tax Credit is refundable.
Maximum increased credit per qualifying child:
Age 6 to age 17: $3,000 Under age 6: $3,600
Adjusted Gross Income (AGI) Phase-out
The increased credit amount ($1,000 or $1,600) phases out by $50 for each $1,000 of modified AGI above:
- $150,000 Married Filing Jointly, Qualifying Widow(er).
- $112,500 Head of Household.
- $75,000 Single or Married Filing Separately.
Maximum credit if phased out of increased credit: $2,000 per qualifying child under age 18.
Adjusted Gross Income (AGI) Phaseout
The $2,000 credit is reduced by $50 for each $1,000 of modified AGI above:
- $400,000 Married Filing Jointly.
- $200,000 Single, Head of Household, Qualifying
Widow(er), or Married Filing Separately.
Credit for Other Dependents
Maximum credit: $500 per qualifying dependent.
A nonrefundable credit of up to $500 is allowed for dependents other than a qualifying child for the Child Tax Credit.
Child and Dependent Care Credit
Credit
The credit is up to 50% of the smallest of:
- $8,000 ($16,000 for two or more qualifying persons).
- Qualified expenses incurred and paid during the year.
- Include expenses for care in 2021 that were paid before 2021. Reduce expenses by dependent care benefits excluded from income.
- Your earned income.
- Your spouse’s earned income.
Note: For 2021, the credit is refundable if your principal place of abode is in the United States for more than half the year.
Exclusion
Instead of taking the credit, you may be eligible to exclude from income an amount up to $10,500 for dependent care benefits received under an employer plan.
Child and Dependent Care Expenses
| Qualified | Not Qualified |
|---|---|
|
• Care outside your home for a qualifying person who regularly spends at least eight hours each day in the your home. • Amounts paid for items other than care (food and schooling) if they are incidental to the care and cannot be separated from the total cost. • Before and after school care. • Household services, including cooks, maids, babysitters, or cleaners, if services were partly for the care of a qualifying person. • Employment taxes, meals, and extra lodging expenses for household employees. • Day camps and similar programs even if they specialize in a particular activity. • Transportation provided by a childcare provider to or from a place that care is provided. |
• Schooling for a child in kindergarten or above. Clarification: The IRS has confirmed that kindergarten costs are educational and do not qualify for the credit. This includes costs paid for a full day of kindergarten at a private school in a district where public schools have half day classes. Costs of preschool do qualify even if the programs have some educational content.
• Cost of an overnight camp. • Expenses reimbursed by a state social service agency not included in income. • Child support payments. • Transportation of the care provider and transportation of a qualifying person not provided by a childcare provider. |
Earned Income Credit (EIC)
The EIC is a refundable credit for low-income earners.
Note: For purposes of calculating the EIC, 2019 earned income may be used if 2021 earned income is less than 2019.
Requirements for Everyone
The following requirements must be met whether or not you have qualifying children.
• Valid Social Security Numbers. You and your spouse (if filing jointly) must have valid Social Security Numbers. Qualifying children must also have valid Social Security Numbers except a child who was born and died during the year. Adoption and individual taxpayer identification numbers (ATINs and ITINs) do not qualify. A Social Security Number on a card that reads “Not Valid for Employment” does not qualify. A Social Security Number on a card that reads “Valid for work only with DHS (or INS) authorization” qualifies.
• You must be a U.S. citizen or resident alien for the entire year. A nonresident alien can claim the credit if married to a U.S. citizen or resident alien, and the nonresident alien chooses to be treated as a resident for the entire tax year by filing a joint return.
• Filing status may not be Married Filing Separately.
• You may not be a qualifying child of another taxpayer.
• You may not file a tax form relating to foreign earned income.
• Your investment income must be $10,000 or less.
Taxpayers Without Qualifying Children
If you meet all the requirements and you do not have a qualifying child for the year, can claim EIC if the following additional requirements are met.
• You must be at least age 24 (if a student), age 19 (if not a student), or age 18 (if former foster or homeless youth).
• You cannot be the dependent of another person.
• Your principal place of abode is in the United States for more than half the year. Residence in U.S. possessions, such as Guam and Puerto Rico, does not qualify.
Adoption Credit
Credit and Exclusion Amount
A taxpayer can claim a credit of up to $14,440 (2021) and also exclude up to $14,440 of employer-provided benefits from income for expenses of adopting an eligible child. The same qualifying expenses cannot be used for both. Limits apply to the total spent over all years for each effort to adopt an eligible child. An attempt that leads to adoption and any unsuccessful attempt to adopt a different child is treated as one effort. Unmarried persons who adopt a child can divide each limit in any way they agree.
| Qualified expenses include: | Nonqualified expenses include expenses: |
|---|---|
|
• Adoption fees. • Attorney fees. • Court costs. • Travel expenses, meals and lodging, while away from home. • Re-adoption in state court. |
• To adopt a spouse’s child. • For surrogate parenting. • Paid or reimbursed by employer, governmental agency or other. • Allowed as a credit or deduction under another tax provision. |
Eligible Child
A child under age 18 or a person who is physically or mentally unable to care for themselves.
Education Credits
American Opportunity Credit. Credit of up to $2,500 per student for the first four years. 40% of the credit may be refundable.
Lifetime Learning Credit. Credit of 20% of the first $10,000 of qualified education expenses (maximum credit is $2,000). No limit on the number of years the credit may be claimed.
