The Child Tax Credit (CTC) helps out parents (and some grandparents and aunts and uncles and other primary caregivers). The CTC for 2021 was bigger and better. Most parents already received monthly CTC payments last year, but they need to file a 2021 tax return to get the full amount due.
The CTC for 2021 Is Big
$3,000 for each child who was 17 or younger on December 31, with an extra $600 if the child was 5 or younger.
Some CTC Paid Last Year, Some Paid This Year
The 2021 CTC was set up to pay out half in monthly payments last July through December. The other half will get paid through the refund claimed on the 2021 tax return.
Some CTC Not Yet Paid at all for Children Who Can Be Claimed for 2021
Because the IRS made the monthly payments based on information on file for past years, some parents missed out completely for kids that hadn’t been claimed for 2019 or 2020. This includes new additions to the household and those claimed off and on. The full CTC for these children will come through the 2021 tax return.
Some CTC Paid for Children Who Can’t Be Claimed on the 2021 Tax Return
Because the IRS made the monthly payments based on information on file for past years, some parents received money for kids they cannot claim for 2021. Although some may owe this money back, many people will qualify for repayment relief. The only way to work this out is by filing a 2021 tax return.
The IRS sent Letter 6419 – “2021 Total Advance Child Tax Credit (AdvCTC) Payments” – in January to everyone it made a monthly CTC payment to. It is very important to report the amount from this letter on the 2021 tax return. Failure to do so can result in long delays receiving a 2021 tax refund.
Bottom Line: Everyone Needs to File a 2021 Tax Return
Anyone who received a monthly CTC payment in 2021 and can claim the children for 2021 must file a return to get the full credit. Anyone who didn’t get monthly payments for one or more children they can claim for 2021 must a file a return to receive the money. Anyone who received a monthly payment for a child they cannot claim for 2021 must file a tax return to work out if they owe anything back.
And filing a 2021 tax return is the only way to claim missing Economic Impact Payments (stimulus checks) and the only way to receive the EITC (Earned Income Tax Credit – which more low-income workers can get for 2021 even if they cannot claim a child) or the tax credits that help out with the costs of child care and college tuition.
The Consumer Financial Protection Bureau’s Guide to Filing Taxes in 2022.
The Internal Revenue Service’s FAQs about the 2021 Child Tax Credit.