Who qualifies for the expanded child tax credit?

Q. What changes did Congress make to the child tax credit?

A. The $1.9 trillion American Rescue Plan Act temporarily expands the child tax credit for 2021. First, it allows 17-year-old children as eligible children to qualify for the credit. Second, it increases the credit to $3,000 per child ($3,600 per child under age 6) for many families. Third, it makes the credit fully refundable and removes the $2,500 earnings floor. Fourth, it requires half of the credit to be paid in advance by having the IRS send periodic payments to families from July 2021 to December 2021.

Note that the other general rules for child-taxcredit eligibility continue to apply. For instance, the child still must be a U.S. citizen, national or resident alien and have a Social Security number. You also must claim him or her as a dependent on your 2021 tax return, and the child must be related to you and generally live with you for at least six months during the year. And you still have to put the child’s name, date of birth and Social Security number on the return.

Not all families with children will get the higher child tax credit, but most will. The enhanced tax break begins to phase out at adjusted gross incomes (AGIs) of $75,000 on single returns, $112,500 on headof-household returns and

$150,000 on joint returns. The amount of the credit is reduced by $50 for each

$1,000 (or fraction thereof ) of AGI over the applicable threshold amount. Note that this phaseout is limited to the $1,000 or $1,600 temporary increased credit for

2021 and not to the $2,000 credit. Families who aren’t eligible for the $3,000 or

$3,600 credit in 2021, but who have AGIs at or below

$400,000 on joint returns or

$200,000 on other returns, could claim the regular credit of $2,000 per child, less the amount of any advance payments they get.

Families with AGIs above the $400,000/$200,000 thresholds will see the

$2,000 per-child credit reduced by $50 for each

$1,000 (or fraction thereof ) of AGI over those thresholds.

Q. Can I take the higher child tax credit for my daughter, who turns 17 in 2021?

A. Yes. If you meet all the other rules for taking the child tax credit, you can claim the credit for your daughter when you file your

2021 Form 1040 next year. The American Rescue Plan broadened the age for children qualifying for the credit for 2021 from 16 and under to 17 and under. So, 17-yearolds qualify as eligible children for the child credit for

2021.