 Income tax 2021-2022 credits for qualifying children and other dependents overview part number three. Get ready to get refunds to the max diving into income tax 2021-2022. Most of this information can be found in the Schedule 8812 Instructions Tax Year 2021 on the IRS website, irs.gov, irs.gov, The income tax formula, we're down below in the credit area, noting that both credits and deductions are good, but if you had a dollar of credit versus a dollar of deduction, the credit typically would be better because generally you'd get the full dollar of benefit as opposed to a deduction where you would have a reduction of the taxable income, the tax calculated then on that taxable income. Also note that the credits are typically broken out into two broad categories. We can think of them in those being nonrefundable credits and refundable credits. Nonrefundable credits won't bring the tax liability below zero. The refundable credits may bring the tax liability below zero at which point we wouldn't be talking about really a refund, even though it might still be called a refund, but we would have a benefit kind of program at that point in time. And some credits might have a nonrefundable and refundable portion to them. So if we look at the second page of the Form 1040, we're looking at Line 19, nonrefundable child tax credit or credit for other dependents from Schedule 8812 and Line 28, refundable child tax credit or additional child tax credit from Schedule 8812. So we're looking at the letter 6419. This was the notice that they tried to send out to give information about the advanced payment. So just a quick recap here. We got the child tax credit, which they made an adjustment to for tax year 2021, basically increasing the level or amount of the credit, making more of it refundable, then taking half of it and trying to give it out during the year of 2021, if everything went correctly in the form of six payments throughout 2021 in advanced child tax credit payments. And then they're sending out this letter to try to inform people of the payments they've received because you're going to need that information to file the tax return for tax year 2021 by April 15th or 18th of 2022, calculating the new credit calculation and then subtracting out the advanced payments that you have gotten. If everything went correctly, that should be about 50%. We should think so you should still get the benefit in the current year. So the IRS will issue letter 6419, which will report the total amount of advanced child tax credit payments issued to you and the number of qualifying children the IRS used to figure your advanced child tax credit payments. So you got the information and you got the children that are qualified and you can kind of line those up and see how you can count the children. So I got one, two, three, and then one, two only on the letter. And then you can say, hey, something's wrong here. You're missing one or something like that. You can kind of line those things up. So you will need letter 6419 to figure the amount of the child tax credit to claim your tax return, to claim your tax return or the amount of additional tax you must report. If you did not receive letter 6419, go to the child tax credit update portal IRS.gov or call 800-908-4184 to get the information needed before completing schedule 8812. So you're going to need that information. You might also be able to get it on your IRS account. So you might go into your actual account on IRS.gov and see if you could pick the information up there. But you're going to need it because if you don't have it and you don't use it, you're going to fill out the tax return improperly. It's probably going to get caught up on the IRS side of things and it's going to have a delay causing problems and so you want to get it right. So married filing jointly, if you filed as married filing jointly on your prior year return, then both you and your spouse will receive a letter 6419. Credits for qualifying children. The RCTC, these are different forms of the child tax credit, refundable child tax credit, non-refundable child tax credit, and the NCTC and the ACTC are credits for individuals who claim a child as a dependent if the child meets certain conditions. To claim a child for the RCTC, these are forms of the child tax credit, the NCTC and ACTC. The child must be your dependent under age 18 at the end of 2021 and meet all the conditions in step one through three under who qualifies as a dependent and the instructions for form 1040. So we'll take a look at that in a second. That answers a lot of questions for most people about basically who qualifies because obviously this credit is kind of based on the dependent requirements. And so then we'll go to the, you can go to the form 1040 instructions just for those dependent requirements. Usually it's fairly straightforward, but you've got those kind of areas that could be a bit more confusing. So example one, your son turned 18 on December 30th, 2021. He is a citizen of the United States and you claim him as a dependent on your return. You cannot use him to claim the RCTC, NCTC or ACTC because he was not under age 18 at the end of 2021. So you still, so your son turned 18 on December because he wasn't under 18. So you've got that age requirement condition there for each qualifying child. So notice he would still be a child in that case or still be a dependent, a dependent child, but not a qualifying child for purposes of the child tax credit. For each qualifying child for whom you are claiming the RCTC, NCTC or ACTC, you must check the quote child tax credit in quote box in column one of the dependent section on page one of the form 1040 or 1040 SR for the child. So first page of the 1040, you got the dependence that will be in there and there'll be a little checkbox to put next to the child tax credit to see if you're taking the child tax credit portion right there on page number one. Credit for other dependents to ODC. The ODC is for individuals with a dependent who meets the following conditions. One, the person is claimed as a dependent on your return. So they're typically still going to be a dependent. We're talking about people that qualify as a dependent. The question then would be do they qualify as a child for a dependent? If they qualify as a child, can you get the child tax credit? If they don't qualify, if you can't get the child tax credit, then they may still be a child and you'd get the ODC, the other dependent credit, possibly, or they may not be a child that's on your tax return as a dependent, which you might be able to get the other dependent credit for. So to determine if an individual is your dependent, begin with step one under who qualifies as your dependent in the instructions for form 1040. So you can go to the 1040. We'll take a look at that in a future presentation. Step two, the person cannot be used by you to claim the RCTC, NCTC, or ACTC. So obviously, if you could get any form of the child tax credit, if you have a dependent that qualifies for the child tax credit, you would be taking the child tax credit. You can't take both the child tax credit and the other dependent credit and the child tax credit is bigger than the other dependent credit. Therefore, if you qualify for the child tax credit, you will take that one and you can't then take the credit for the other dependents. If you can't get the child tax credit and they're a dependent, either a child who doesn't qualify for the child tax credit or not a child, but still a dependent, then you're probably looking to get the credit for the other dependent. Number three, the person was a U.S. citizen, U.S. national, or U.S. resident alien with more information, see publication 519. If the person is your adopted child, you could see adopted child later. Example two, your 10-year-old nephew lives in Mexico and qualifies as your dependent. He is not a U.S. citizen, U.S. national, or U.S. resident alien. You cannot use him to claim the ODC in that case. For each dependent for whom you are claiming the ODC, other dependent credit, you must check the quote, credit for other dependents, end quote box in column four of the dependent section on page one, a form 1040 or 1040 SR. So right on the first page of the form 1040, you got where your dependents are at. If they qualify for the child tax credit, you check that box. If not, then they'd probably qualify or possibly qualify for the other dependent credit. You check that box. You cannot use the same child to claim the credit under the credits for qualified children or ODC. So you got to check qualifying children first. If not, then ODC, other dependent credit, is what you're looking for. Adopted child and adopted child is always treated as your own child. And adopted child includes a child lawfully placed with you for legal adoption. If you are a U.S. citizen or U.S. national and your adopted child lived with you all year as a member of your household in 2021, that child meets condition three earlier to be a qualified person for the ODC other dependent credit. Residency requirements for tax year 2021 taxpayers who meet certain residency requirements described under box A or B discussed later may be eligible to claim the RCTC and ODC. Those filers are only need to complete parts I1 or I1A and I1B and I3 if applicable of schedule 8812. So we'll take a look at that later. Taxpayers who do not meet the residency requirements described under box A or B discussed later may be eligible to claim the NCTC, ACTC, and ODC child tax credit forms and the other dependent. They will figure their forms of child tax credit, NCTC, ACTC, and ODC, dependent credit in a manner similar to how these credits were figured for 2020. So the rules are going to be a little bit different, possibly, possibly similar to the prior year before they made all these big changes. So those filers need to complete part 1A1C2A2B if applicable to C and 3 if applicable of schedule 8812.