Citizenship or residency status in the Freely Associated States (Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau) by itself does not entitle you to claim the Child Tax Credit. However, residents of these states are eligible for the Child Tax Credit if they meet all other requirements for the credit.
For 2021, the Child Tax Credit has undergone several changes:
- The maximum credit amount has increased to $3,000 per qualifying child or $3,600 per qualifying child under age 6 at the end of 2021.
- The credit is fully refundable for most taxpayers, meaning you can receive the credit even if you do not have any earned income or your credit exceeds your tax liability.
- The credit is advanceable, allowing you to receive part of the credit in advance through periodic payments during 2021.
- The credit is subject to phaseout based on your modified adjusted gross income (MAGI). The phaseout begins at a MAGI of $75,000 for single filers, $112,500 for head of household filers, and $150,000 for married filing jointly filers. The credit is reduced by $50 for each $1,000 (or fraction thereof) of MAGI above the threshold amounts. The credit is fully phased out for single filers with a MAGI of $95,000 or more, head of household filers with a MAGI of $135,000 or more, and married filing jointly filers with a MAGI of $170,000 or more.
To claim the Child Tax Credit, you will need to file Form 1040 or Form 1040-SR and attach Schedule 8812, Child Tax Credit, to your return. You will need to provide the required information about each qualifying child on Schedule 8812. If you are eligible for the credit, it will reduce your tax liability or increase your refund.
Sources:
Publication 17 (2023)
Rev. Proc. 2022-22
