Advance Child Tax Credit for "Non-Traditional Families"

The Internal Revenue Service this week told “non-traditional families” that they could also qualify for advance payments of the Child Tax Credit.

Family representatives, the IRS urges, should check their eligibility, whether they are parents, grandparents, foster parents or someone who’s caring for siblings or other relatives.

The initial effort to get taxpayers signed up for the Child Tax Credit payments started early in the year, but the IRS says there’s still time to get advance payments in the last months of 2021.

Why claim the Child Tax Credit?

Families that claim the credit for tax year 2021 get up to $3,000 for every qualified child between 6 and 17 years old at the end of 2021. That benefit is $3,600 per child if they are under age 6 at the end of the year.

The advance 2021 payments will total up to half of the taxpayer’s total Child Tax Credit. The remainder is paid out with the refund when the taxpayer files their 2021 return.

Qualifying children can be the taxpayer’s child. But a qualified child can also be a stepchild, an eligible foster child, a sibling (including step-siblings or half-siblings), or even a descendent of these relations—such as a grandchild, niece, or nephew. 

How do taxpayers qualify for the Advance Child Tax Credit?

In most cases, a family must have a qualifying child to be eligible for the Advance Child Tax Credit payments. The taxpayer—or the taxpayer’s spouse, if filing jointly—must have their main home in one of the 50 U.S. states or the District of Columbia and has to live there for more than half the year.

There are also certain qualifications the child has to meet in order to qualify for the credit:

  1. For tax year 2021, a qualifying child is an individual who does not turn 18 before January 1, 2022 and the individual does not provide more than one-half of his or her own support during 2021.
  2. The individual lives with the taxpayer for more than one-half of tax year 2021. For exceptions to this requirement, see IRS Publication 972, Child Tax Credit and Credit for Other Dependents.
  3. The individual is properly claimed as the taxpayer’s dependent. For more information about how to properly claim an individual as a dependent, see IRS Publication 501, Dependents, Standard Deduction, and Filing Information.
  4. The individual does not file a joint return with the individual’s spouse for tax year 2021 or files it only to claim a refund of withheld income tax or estimated tax paid.
  5. The individual was a U.S. citizen, U.S. national, or U.S. resident alien. For more information on this condition, see IRS Publication 519, U.S. Tax Guide for Aliens.

How do taxpayers sign up for the Advance Child Tax Credit?

For many, the key to getting advance payments of the Child Tax Credit is the IRS’ Non-filer Sign-up Tool. This online tool helps those who don’t normally have to file a tax return qualify for advance child tax credit payments, the recovery rebate credit or Economic Impact Payments (EIPs). All it takes is completing a simplified tax return.

The Non-filer Sign-up Tool will be available through Oct. 15.

Even if a family misses the deadline for advance payments of the credit, they can still file a 2021 return during filing season to get the full amount of the credit as a refund.

Those taxpayers who are required to file a return should check the IRS website in coming weeks, as the Child Tax Credit Update Portal will be updated, allowing families to pass new information about the qualifying children they plan to claim on their 2021 tax return. This will allow the IRS to adjust their monthly Advance Child Tax Credit payments.

Source: COVID Tax Tip 2021-150

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