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ReadDue to the American Rescue Plan Act (ARP Act), the Child Tax Credit will bump up in 2021 to $3,000 for children between 6 and 17, and $3,600 for children under 6. Because it’s a tax credit, that money directly reduces your tax bill dollar-for-dollar, so it provides more tax savings than a tax deduction.
The $2,500 earned income requirement has been removed, so unemployed parents can still qualify for the credit. The credit begins phasing out at a rate of $50 for every $1,000 over $75,000 for single filers, $112,500 for heads of household and $150,000 for married couples filing jointly.
If you are caring for other dependents that are not children, such as an elderly parent, you may be able to claim the Credit for Other Dependents.
Check out our page on Child Tax Credits to learn more.
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