Phase Out Limits - Advanced Child Tax Credits

Updated: Nov 28, 2021


For the tax year 2021, the Child Tax Credit is increased from $2,000 per qualifying child to:

  • $3,600 for children ages 5 and under at the end of 2021; and

  • $3,000 for children ages 6 through 17 at the end of 2021.

  • The $500 nonrefundable Credit for Other Dependents amount has not changed.

Your Child Tax Credit phases out in two different steps based on your modified adjusted gross income (AGI) in 2021. The first phaseout can reduce the Child Tax Credit to $2,000 per child. That is, the first phaseout step can reduce only the $1,600 increase for qualifying children ages 5 and under, and the $1,000 increase for qualifying children ages 6 through 17, at the end of 2021.The second phaseout can reduce the remaining Child Tax Credit below $2,000 per child.


Phase-out #1 Explained


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.


Phase-out #2 Explained


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.


Keep in mind that these advanced payments will ultimately reduce your year-end tax refund or tax credits applied to your tax liability. For more information visit www.irs.gov.


Source: IRS


Specialists Accounting will prepare your taxes to assure that you get all the tax credits you are entitled, and eliminate the guesswork and stress of preparing your own taxes.


Contact us today at 561-372-1929



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