For the 2021 tax year only, the new American Rescue Plan Act (ARPA) makes big, taxpayer-friendly changes to the federal income tax child tax credit (CTC).
Here’s what you need to know, starting with some necessary background information.
For 2018-2020 and 2022-2025, the maximum annual CTC is $2,000 per qualifying child.
A qualifying child is an under-age-17 child who could be claimed as your dependent for the year. Basically, that means the child lived with you for more than half the year; did not provide more than half of his or her own support; and is a U.S. citizen, U.S. national, or U.S. resident.
The maximum $2,000 CTC is phased out (reduced) if your modified adjusted gross income (MAGI) for the year exceeds $200,000, or $400,000 for a married joint-filing couple. The credit is phased out by $50 per $1,000 (or fraction of $1,000) of MAGI in excess ... Log in to view full article.