Child Tax Credit Calculator 2021

Ready-To-Use Child Tax Credit Calculator 2021

Download Child Tax Credit Calculator 2021 in Excel, OpenOffice Calc, and Google Sheet to easily calculate Child Tax Credit for 2021.

With the help of this template, you can check your eligibility for Child Tax credit based on your Modified Adjusted Gross Income(MAGI) and also calculate the amount of Child Tax Credit.

Moreover, this template consists of calculations of the first and second phaseout for Child Tax Credit based on your MAGI score.

What is Child Tax Credit?

Child Tax Credit is a provision for taxpayers given by IRS that helps to reduce the tax liability based on your income.  It is calculated based on the number of children dependents you have.

Moreover, CTC or Child Tax Credit starts decreasing as your income increases. If your income is high then you will not be eligible for this credit.

Generally, the child tax credit is for qualifying children under the age of 16. But in 2022, the government has increased the credit amount for children under the age of 6 under the American Rescue Plan after the pandemic.

For 2021, there are 2 types of child tax credits:

  • Credit for Children under the age of 6.
  • Credit for Children Under the age of 18.

Previously the maximum age limit was 16 and there was no additional tax credit for children under the age of 6.

Furthermore, earlier this child tax credit was partially refundable. This means that you could only deduct the credit up to a certain limit.

Under the American Rescue Plan, for 2021, the Child Tax Credit is fully refundable. This means that the taxpayer doesn’t have to owe taxes to IRS for availing the credit.

Thus, even if your tax is 0, you can get a refund of the full amount of the eligible child tax credit.

Child Tax Credit 2021

For 2021, the credit amount has been raised the Child Tax Credit from $2,000 to $3,600 for qualified children under the age of 6, and from $2,000 to $3,000 for all qualifying children under the age of 18.

Furthermore, the American Rescue Plan permanently extended the entire Child Tax Credit to Puerto Rico and the United States Territories. For the first time, low-income families in Puerto Rico and the United States Territories will be eligible for this critical financial aid to help their children’s development, health, and educational success.

For 2021, there are 2 types of child tax credits:

1. $3600 – Credit for Children under the age of 6.

2. $3000 – Credit for Children Under the age of 18.

In case, your child is born before 31st December 2021, the IRS allows the taxpayer to avail $3600 Child Tax Credit.

Until now, no legislation has been passed for this increased Child Tax Credit. Therefore, IRS might roll back to previous amounts with some inflation adjustments for 2022.

Advance Child Tax Credit 2021

Additionally, for 2021, IRS also allowed the taxpayers to receive the Child Tax Credit as Advanced Child Tax Credit as monthly payments.

Taxpayers may get direct advance payments of their Child Tax Credits in amounts ranging from $250 to $300 per qualified child, depending on age.

Beginning in July 2021, the US Treasury disbursed payments monthly. The advance payment scheme allowed taxpayers to use their benefits throughout the fiscal year.

Taxpayers who were eligible for the 2021 credit and wished to receive advance payments had to confirm their bank’s direct deposit details using an online portal.

Moreover, the 2021 direct deposit payments of CTC were based on the taxpayer’s 2020 income and information about dependents submitted on 2020 tax forms. Non-filers for 2020 may be eligible for advance payments if they register on an online IRS site in 2021.

Furthermore, eligible taxpayers that collected advance payments for the last six months of 2021 will have to deduct the received credit from the total yearly child tax credit. They can claim the remaining yearly credits on their 2021 tax returns.

Additionally, it should be kept in mind that the advance payments are not taxable income. They reflect early receipt of the tax advantages from the credits.

Child Tax Credit 2021 Eligibility Criteria

There are 7 eligibility criteria to qualify for Child Tax Credit.

Age Criteria

To qualify for Child Tax Credit in 2021m your child must be under age 18 at the end of the year. Previously, it was available for children under the age of 16.

Moreover, you can claim an increased credit if your child is under age 6 and you meet certain income criteria.

Relationship Criteria

You can claim the child tax credit if the child is:

  1. Your child.
  2. Stepchild.
  3. Foster Child living with you by a legal authority like court or authorized agency
  4. Legally Adopted Child. You can claim the child on your tax return even if the adoption has not been finalized by the end of the tax year.
  5. Blood Relatives. Brother or sister, stepbrother, stepsister.
  6. Descendants of Qualifying people like nieces, nephews, and grandchildren if they qualify for other criteria.

Financial Support Criteria

To qualify for this criteria, the child has not provided for more than half of his or her financial expenses during the tax year.

Dependency Criteria

To claim a child as a dependent and get the child tax credit he or she must:

  1. Has to qualify the relationship criteria.
  2. He/She qualifies the Age Criteria and must be a full-time student for at least five months of the year. If the child is permanently disabled, there is no age limit.
  3. The child must have lived with you for more than half the year.
  4. He/She must qualify for the Financial Support Criteria.

Citizenship Criteria

To qualify for the CTC, the Child must be a U.S. citizen, a U.S. national, or a permanent resident of the United States. Individuals born in American Samoa or the Commonwealth of the Northern Mariana Islands are considered “US nationals” for tax purposes.

Residence Criteria

To get the child tax credit, the child must have lived with you for more than half of the tax year.

IRS allows a few exceptions:

  • A newborn baby before the 31 December of the tax year shall be considered to have lived with you for the entire year.
  • Temporary absences from school, vacation, business, medical care, military duty, or imprisonment in a juvenile institution by you or the child are considered as time the child stayed with you.
  • Children of divorced or separated parents are likewise exempt from the residence requirement.

Income Criteria

The IRS decides the amount of Child Tax Credit based on your Modified Adjusted Gross Income(MAGI) and your filing status.

For 2021, you can claim the credit in full if your modified adjusted gross income is less than:

  • $75,000 for single filers
  • $112,500 for heads of household
  • $150,000 for married couples filing jointly.

Above these income levels, the credit begins to phase out.

Child Tax Credit 2021 Phaseout Limits

The IRS reduces the Child Tax Credit in 2 different Phaseouts.

Child Tax Credit First Phaseout Limit

Your Child Tax Credit will start to reduce, if your MAGI exceeds the above-mentioned levels but is less than $400,000 for married filing jointly and $200,000 for all other filing statuses.

For every $1,000, your total credit per child decreases by $50 or a fraction thereof. Under this phaseout, your credit is not reduced below $2,000 per child.

Example

Status: Single Filer
Name: Mr. Smith John
MAGI: $107,000
Children Under the Age of 6: 1
Children Under the Age of 18 but above 6: 2

Allowed Child Tax Credit: $3,600 + $3,000 + $3,000 = $9,600

Income Above MAGI Threshold: $107,000 – $75,000 = $32,000

Based on the rules, for every $1,000, $50 will be reduced but not below $2000.

That is ($32,000 / $1,000 = 32. For each $1,000, reduce $50)

Thus, Mr. Smith John’s credit for each child will be reduced by $1500 for children under 6 and $1,000 for children above 6 up to the age of 18.

Actual Child Tax Credit: $2,000 + $2,000 + $2,000 = $6,000.

Therefore, the taxpayer gets $2,000 credit until his MAGI is below $400,000 for married filing jointly and $200,000 for all other filing statuses.

Child Tax Credit Second Phaseout Limit

The second phaseout begins after the MAGI reaches $400,000 for married filing jointly and $200,000 for all other filing statuses.

For every $1,000, your total credit per child decreases by $50 or a fraction thereof. Under this phaseout, your credit will start reducing from $2,000 and can be reduced to $0.

Formula To Calculate Modified AGI for Child Tax Credit

MAGI = Adjusted Gross Income + Foreign Earned Income and Housing exclusions + Foreign Housing Deduction + Excluded income from bona fide resident of Puerto Rico or American Samoa

Download Child Tax Credit Calculator 2021 (Excel, OpenOffice Calc, & Google Sheet)

Child Tax Credit Calculator 2021

We have created a simple and easy-to-use Child Tax Credit Calculator 2021 with predefined formulas and functions. Just insert the number of children in the respective cell and it will automatically calculate the Child Tax Credit for you. Moreover, it also consists of the Child Tax Credit Phaseout Table

Download by clicking below on the desired format:

Microsoft Excel OpenOffice Calc Google Sheet

Additionally, you can also download Federal Income Tax templates like Adjusted Gross Income Calculator 2021, Itemized Deduction Calculator 2021, Federal Income Tax Calculator 2021, Recovery Rebate Credit Calculator, Employee Retention Credit Calculator 2021, Paycheck Calculator, and IRS Compliant Mileage Log Template.

Furthermore, feel free to contact us for the customization of this template as per your requirement. We also design new templates based on your needs. You can hire us for our services on Fiverr or directly contact us at info@msofficegeek.com.

How to Use Child Tax Credit Calculator 2021?

This template consists of 2 sheets: Child Tax Credit Calculator 2021 and Child Tax Credit Phaseout Sheet.

Child Tax Credit Calculator

The Child Tax Credit Calculator consists of 2 sections: Eligibility Calculations and Child Tax Credit Calculations. Let us understand how to use this calculator in detail.

Eligibility Calculations

Child Tax Credit Calculator 2021

As we all know, the Child Tax Credit Eligibility requires MAGI calculations, this section calculates your Modified Adjusted Gross Income(MAGI).

It consists of the following heads:

AGI 2021 from line 11 of Form 1040
Foreign Earned Income and Housing exclusions
Foreign Housing Deduction
Excluded income from bona fide residents of Puerto Rico or American Samoa
Modified Adjusted Gross Income 2021

Insert the items applicable to you. Usually, very few people have Foreign Earned Income and other items. Thus, in such cases, your AGI will be your MAGI.

Child Tax Credit Calculations

Child Tax Credit Calculator 2021

This section calculates the Total Child Tax Credit Amount. It consists of the following heads:

No. Of Dependents Under Age 6
No. Of Dependents Under Age 18
CTC Per Child Below Age 6
CTC Per Child Below Age 18
Total CTC for Child Below Age 6
Total CTC for Child Below Age 18
Child Tax Credit 2021
Advance Child Tax Credit Received 2021
Total Claimable Child Tax Credit Claimable on Tax Return 2021

First of all, insert the number of dependents against the respective age group.

Based on your MAGI, the Child Tax Credit amount will be decided. Hence, if your MAGI is above the phaseout limits then refer to the phaseout table sheet.

For every $1,000, your total credit per child decreases by $50 or a fraction thereof. Under this phaseout, your credit is not reduced below $2,000 per child.

If your MAGI is below the first phaseout limits, then refer to Child Tax Credit First Phaseout Table given in the section below.

In case your MAGI is above the second Phaseout limit then refer to Child Tax Credit Second Phaseout Table given in the below table.

Moreover, if you have opted for and received any advance child tax credit issued by IRS in 2021, insert the following amount to get the claimable child tax credit on your tax return for 2021.

That’s it. The template will calculate the total amount of Child Tax Credit you are eligible for.

Child Tax Credit 2021 Phaseout Table

This sheet consists of 2 Child Tax Credit Phaseout Tables. These tables display the amount of Credit reduced by $50 for each $1,000 excessive of the phaseout limits.

Child Tax Credit First Phaseout Table

Child Tax Credit First Phaseout Table 2021

The Child Tax Credit begins to be reduced to $2,000 per child if your modified AGI in 2021 exceeds:

  • $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
  • $112,500 if filing as head of household; or
  • $75,000 if you are a single filer or are married and filing a separate return.

The first phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

Source: www.IRS.gov

Child Tax Credit Second Phaseout Table

Child Tax Credit Second Phaseout Table 2021

The Child Tax Credit won’t begin to be reduced below $2,000 per child until your modified AGI in 2021 exceeds:

  • $400,000 if married and filing a joint return; or
  • $200,000 for all other filing statuses.

The second phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

Source: www.IRS.gov

Frequently Asked Questions

What if my Child Tax Credit amount is more than my tax liability?

Previously, the child tax credit was partially refundable. But, the child tax for 2021 is fully refundable. Hence, if your credit amount is more than your tax liability then first the tax liability will be settled and the remaining amount will be eligible for a tax refund.

What if I have received excess or short of Child Tax Credit?

The IRS issued payment for Advance Child Tax Credit in 2021. If you have received in excess the same will be adjusted against your tax liability and will be increased. WHereas if you have received short, then the same can be claimed on your form 1040.

Source: www.IRS.gov

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Disclaimer: This article is for information and educational purpose. Information provided here shall not be treated as tax advice. Kindly consult a tax expert before filing your tax return.

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