Child tax credits are given every year, but this year they were expanded to be worth more money to provide support to parents.
The changes in the credit for 2021 have raised a lot of questions and created a lot of confusion.
There are some things parents need to keep in mind when claiming the credit on their tax return.
Child tax credit explained
The most a parent could see for a young child was $3,600.
On top of that, parents could see the first half of the credit through advanced payments in 2021.
They could then claim the rest on their 2021 tax return this year.
Income limits for the credit were $75,000 for single filers, $112,500 for HOH filers, and $150,000 for married filing jointly.
Can each parent claim the child tax credit?
Only one parent claims a dependent on their taxes.
If filing married together, then both parents are technically claiming one dependent.
Married filing separately, one parent can claim half so both parents are splitting the benefit.
If you’re divorced, separated, or unmarried then only one parent can claim the credit.
Whoever claimed the child in 2020 was the parent who received the advanced payments.
If you alternate the child, you may be forced to pay back the advanced payments when the other parent claims the child on their tax return this year.