My Blog - Highlights of Tax News

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Do you have earned income? To qualify for the EIC, you must have some earned income, such as wages.
 

Do you have investment income over $10,000? If your investment income is over $10,000, then you will not qualify for the EIC.
 

Did you have a child live with you for more than 6 months last year? On the Dependent Information screen where it asks the number of months your child lived with you, if you selected less than 6 months, you will not qualify for the Earned Income Credit for that child.
 

Another common reason for not qualifying for the EIC is if you have no qualifying children for the EIC and if you are younger than age 19 (24 if you were a student, or 18 if you were a qualified foster youth or homeless youth). You must be at least that old to get the EIC if you do not have any kids.
 

Also double check how you answered the four Earned Income Credit (EIC) questions.

1. The first question asks if you  and your spouse (if married) have valid Social Security numbers. The default answer is Yes. If you choose No, the EIC is      not allowed.
2. The second question asks if your home was in the United States for more than half the year last year.      The default answer is Yes. If you choose No, the EIC is not allowed.
3. The third question asks if the      IRS has sent you a notice saying that you cannot claim the EIC in 2021. The default answer is No. If you choose Yes, the EIC is not allowed.
4. The fourth question asks if you      were a nonresident alien for any part of 2021. The default is No. If you choose Yes, the EIC is not allowed.

The American Rescue Plan increased the amount of the Child Tax Credit and made it refundable for most people with children.
 

It also made half of the credit payable up front before filing a 2021 tax return. The IRS started sending payments to people based on the number of dependents on their 2020 or 2019 tax return. These payments started going out in July of 2021 and were sent each month through December of 2021.
 

If you received advance Child Tax Credit payments, you can enter the information on the Child Tax Credit Advance Payments screen and we'll use that information to calculate the remaining amount of your Child Tax Credit.
 

Any advance Child Tax Credit payments you received will reduce the amount of the Child Tax Credit you can take when you file your return. This is because you already received that portion of the Child Tax Credit before filing your return.
 

In some cases, you may need to repay some of the advance Child Tax Credit payments if the advance is more than the credit you qualify for when you file your return.

New for 2021: The American Rescue Plan expanded the Child Tax Credit for 2021, increasing the amount of the credit and making it refundable for most people. The IRS also made advance Child Tax Credit payments from July through December of 2021.
 

If you lived in the United States for more than six months or were a bona fide resident of Puerto Rico, you may qualify for the Refundable Child Tax Credit.
 

I you lived outside the United States and Puerto Rico, you may still qualify for the Nonrefundable Child Tax Credit.
 

Whether or not you lived in the United States, there's also a Credit for Other Dependents available for dependents who don't qualify for the Child Tax Credit.
 

Any advance Child Tax Credit payments you received will reduce the amount of the Child Tax Credit you'll take when you file your tax return. This is because you already received that portion of the Child Tax Credit from July through December of 2021, prior to filing your tax return.
 

The Child Tax Credit calculates and shows on Schedule 8812.