Who qualifies as a dependent for the child tax credit 2021? It’s complicated

The revised child tax credit will bring thousands of dollars to families who qualify with children, based on their age. Those age requirements make it different from the rules around the third stimulus check for dependent qualifications. With the new child tax credit, the older the child, the less money each household will receive. Here’s how CTC eligibility works. 

The new child tax credit payments are expected to begin arriving in July, with periodic disbursement throughout the end of the year — the rest would be paid out next year. You can receive up to $3,600 per qualified child, depending on the child’s age and your adjusted gross income (AGI). For example, if you have a single income of less than $75,000 and you have one child younger than 6, you’ll qualify for $3,600.

More details are expected to arrive from the IRS as the date to send the first CTC payment comes closer. Read on for what we know so far. In the meantime, here are details on new health care and insurance savings from the stimulus law, a possible fourth stimulus check and student loan forgiveness. This story has been updated.

Children 17 and younger can qualify for a child tax credit payment

If you have dependents who are 17 years of age or younger, they can each count toward the new child tax credit. However, the amount they’re eligible for depends on their age. Kids between the ages of 6 and 17 will count for up to $3,000 each. Kids who are under the age of 6 can count for up to $3,600 each.

The current child tax credit offers families $2,000 per kid age 16 and younger, so adding an additional $1,000 to $1,600 per kid can significantly help families financially. Plus, the new CTC adds 17-year-olds to the mix.

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Dependents between 18 and 24 count toward a partial payment

If you have 18-year-old dependents, they can qualify for up to $500 each toward the child tax credit amount you’ll receive. If you have a dependent between the age of 19 and 24 who is attending college full time, they can also qualify for up to $500 apiece towards your total amount, per the new stimulus bill. 

Here’s the situation for babies born in 2021

If you’re expecting your baby to arrive before the end of 2021, the newborn will also qualify for up to $3,600 toward the child tax credit. This includes children who are adopted, assuming they’re US citizens (more below). You’ll likely be able to use the IRS portal once it’s available to update your information to add your new family member or you can claim the tax credit when you file your 2021 tax return next year, according to Garrett Watson, a senior policy analyst at Tax Foundation. While it’s unclear when the portal will open, it’s likely it’ll be open by July, when the IRS is expected to send the payments.

If you share custody, here’s what to know about the child credit

“Double dipping” benefits for the same child worked for the first two stimulus checks, where a loophole entitled unmarried parents who share custody to both claim the child dependent, in a specific situation. That isn’t the case with the 2021 child tax credit. In fact, overpayment could result in you being asked to return the money to the IRS.

The child must live with you at least part time

If you’re claiming the new child tax credit for your child, note that they must live with you at least six months out of the year. There are exceptions to this rule, though, including temporary absences. “A person is considered to have lived with you during periods of time when one or both of you are temporarily absent due to special circumstances,” the IRS said in its CTC webpage. This includes illness, education, business, vacation and military service.

Also, a newborn child born later in the 2021 year is included in the exception and will be considered as living with you for the entire year. The IRS will be working off the 2020 tax return, which will not have children born in 2021 listed, according to Joanna Powell, managing director and CFP at CBIZ, so remember to update your info in the portal.

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Additional requirements your child must meet

If your child isn’t a US citizen and doesn’t have a Social Security number, there’s no way around this one: They don’t qualify. When you file your individual income tax return (Form 1040), you’re required to list your dependents and their Social Security numbers when you’re claiming them for the child tax credit. 

This includes adopted children. An adopted child who isn’t a US citizen and has an ATIN or ITIN (adopted/individual taxpayer identification number) won’t qualify for the child tax credit, per the IRS. “The child must have an SSN to be a qualifying child eligible for the child tax credit.”

This is unlike the third stimulus check, where mixed-status households could receive a check and only one member of the household needed to have a Social Security number.

For more information, here’s everything to know about the 2021 child tax credit, when the CTC payments will come and qualifications for parents to receive the payments.