The Child Tax Credit and Divorce

By Nate Badger, July 15, 2021

child tax credit divorce

During July of 2021, under the new Biden administration, the American Rescue Plan revived and increased the Child Tax Credit (CTC) initiative. Some 36 million households will be eligible to receive a tax credit this year.

Given this is a new development, many divorced parents may be confused and parents in the process of divorcing have an opportunity to discuss the credit during the divorce process. Consider working with a mediator for your divorce, or for post-divorce modifications, to be informed and to work collaboratively with your co-parent, with the assistance of a neutral

So, who qualifies for this new Child Tax Credit? 

92% of households with children will be eligible for this year’s child tax credit. Depending on factors like:

  • household income,
  • number of children, and
  • ages of those children,

you may be eligible for up to $3,600 in payments starting July 15, 2021. 

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However, as is often the case with tax-related payments, qualification can be confusing. Let me break it down for you. 

Children that qualify you for the CTC: Depending on the ages of your children, you are entitled to a different credit amount. Any child under the age of 18 is eligible. Children ages 0-5 qualify you for the full payment of $3,600, while children ages 6-17 qualify you for up to $3,000 depending on your income. Children must have a valid social security number and must live with the tax payer for at least half of the year. Finally, eligible children must have been claimed as a dependent on your 2020 forms.  

Income thresholds that qualify you for the CTC: The amount of credit you are able to receive is contingent on your income and how you file your taxes. If you are a single filer, you are entitled to the full payment of $3,600 if you have a yearly income of less than $75,000. A single filer can claim a partial credit amount if his or her income is below $200,000. A person filing as the head of household is eligible for the full $3,600 when making less than $112,500, and a partial amount when making less than $200,000. Lastly, couples filing jointly can receive full payment if their yearly income is less than $150,000, and partial payment if that number is less than $400,000. 

The IRS uses a statute called Adjusted Gross Income (AGI) to determine the amount each household is entitled to. You’ll find your AGI on Line 8b of the 2019 Form 1040 or line 11 of the 2020 form 1040. Take a look at the table below to see whether you qualify for a Child Tax Credit this year.

Family Income Qualification Child Age Qualification
Single Filer (Full) – AGI below $75,000

Single Filer (Partial) – AGI below $200,000

Ages 0-5 – up to $3,600
Head of Household (Full) – AGI below $112,500 

Head of Household (Partial) – AGI below $200,000 

Ages 6-17 – up to $3,000    
Couple Filing Jointly (Full) – AGI below $150,000 

Couple Filing Jointly (Partial) – AGI below $400,000  

MWI can help divorced couples manage this credit with their custody agreements. Whichever parent claims the child as a dependent on their taxes will be given the credit. Mediation can be a powerful tool to determine divorce terms related to the CTC. If parents have joint custody, the credit can be partially redirected to the parent that didn’t claim the child on their taxes. A mediator can help you and your co-parent find a way to fairly share this credit based on your custody agreement or interests.

If your children are age five or younger, and you meet the AGI requirements on the left, you are entitled to $3,600 per child. However, depending on an established or pending custody agreement and how divorced families file their taxes, this number can change. Don’t overlook government tax benefits during and after your divorce. Schedule a call with a mediator, or email MWI’s Director of Mediation Services, Josh Hoch to learn more about managing tax credits and divorce.

Nate Badger

About the Author:

Nate Badger is an undergraduate student studying Economics and political science at Bucknell University. This summer at MWI, Nate is training to be a mediator and providing mediation program assistance to staff. Nate’s interest in Law and public service brought him to MWI to get a new perspective on the legal system. Nate can be reached at nbadger@mwi.org.

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