Child Tax Credit FAQs for Your 2021 Tax Return

As the April 18 tax filing deadline looms, parents have lots of questions about how to report the child tax credit and last year's monthly payments on their tax return – and we have answers.

picture of a cut-out family next to the words "child tax credit"
(Image credit: Getty Images)

With the April 18 filing deadline right around the corner for most individual federal income tax returns, you may be hard at work getting ready to file your return or reviewing a return done by your tax preparer. As you're doing this, you'll want to keep in mind the tax changes that applied for 2021…and how they should be reported on your return. You'll also want to make certain that you're taking all the tax breaks you are entitled to. One of the most significant changes for 2021 was to the child tax credit, which is claimed by tens of millions of parents every year.

The child tax credit for the 2021 tax year is bigger and better than the 2020 credit. The credit amount was significantly increased, and the IRS made monthly advance payments to millions of qualifying families from July through December 2021.

The 2021 child tax credit changes are complicated and don't help everyone. For instance, there are two ways in which the credit can be reduced for upper-income families. That means some parents don't qualify for a larger credit and, as before, some won't receive any credit at all. More children qualify for the credit on 2021 returns. And, this year, when you file your 2021 tax return, you'll have to reconcile the advance payments you received with the actual child tax credit you're entitled to claim.

It's all enough to make your head spin. But don't worry – we have answers to a lot of the questions parents are asking about the 2021 child credit, including how to report the credit and any advance payments they got on their 2021 return. Once you read through the FAQs below, you should feel more at ease about the credit and filling out and reviewing your Form 1040 (opens in new tab).

Joy Taylor
Editor, The Kiplinger Tax Letter

Joy is an experienced CPA and tax attorney with an L.L.M. in Taxation from New York University School of Law. After many years working for big law and accounting firms, Joy saw the light and now puts her education, legal experience and in-depth knowledge of federal tax law to use writing for Kiplinger. She writes and edits The Kiplinger Tax Letter and contributes federal tax and retirement stories to and Kiplinger’s Retirement Report. Her articles have been picked up by the Washington Post and other media outlets. Joy has also appeared as a tax expert in newspapers, on television and on radio discussing federal tax developments.