In addition, up to $ 1,400 of child tax credit is refunded. This means it can be claimed by taxpayers whose tax liability is already zero.
A few details to note. First, the tax credit can be claimed for any eligible child. For example, if you have triplets 10 years old, you could potentially get a $ 6,000 loan. Second, this is a tax credit, not a deduction. This means that the child tax credit reduces your tax burden, dollar after dollar. If, after accounting for your deductions, you owe $ 8,000 in taxes for 2020 and you have two eligible children, it could reduce your tax liability to $ 4,000.
Do you qualify
As with many tax breaks, the child tax credit is limited in income. The loan is meant to help working families – not the rich. However, the Law on Tax Cuts and Employment has not only doubled the tax credit for children from 2018. In addition, income limits were drastically raised, making the loan available to far more American families than in previous years.
The income constraints are not designed to correct upward inflation over time. Therefore, here is a chart of the thresholds for income from child tax credits applicable to all tax years from 2018 to 2025, according to the applicable tax law: