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Child Tax Credit Boosted for Puerto Rico Families in 2021

TaxAct’s Guide to Your 2021 Taxes Taxes

Ever since the U.S. first introduced the Child Tax Credit (CTC) in 1997, Puerto Rican residents with taxable income have been eligible to claim payments for their children — but there was a catch.

A smiling mother holds a yawning infant.

In previous years, families in Puerto Rico also needed to have at least three children to qualify for the credit. This restriction made only approximately 11 percent of the population in Puerto Rico eligible to claim the CTC in years past.

But, thanks to the American Rescue Plan introduced in March of last year, those requirements have been lifted for 2021. Here’s what Puerto Rican families need to know about claiming the Child Tax Credit this year.

Who qualifies for the CTC in Puerto Rico in 2021?

All Puerto Rican residents with at least one qualifying child who lived in Puerto Rico for at least half the year in 2021 can claim the Child Tax Credit this year. The credit is fully refundable, which means Puerto Rican families do not need taxable income to claim the payment.

Many residents of Puerto Rico qualify to claim the Child Tax Credit in 2021, but they must file a Form 1040-SS to claim their payment.

How is this different from last year?

Previously, most Puerto Rican residents were ineligible for the CTC payments due to a restriction requiring Puerto Rican families to have at least three children and to have taxable income.

This year, families in Puerto Rico can claim the enhanced maximum credit of up to $3,000 for qualifying children ages 6-17 or $3,600 for children ages 5 and under. No taxable income is required to receive these CTC payments.

How is this different from US residents?

Families in Puerto Rico can now claim the same CTC as families within the U.S. The main difference is that the advance Child Tax Credit payments were not offered to most Puerto Rican residents in 2021. Instead, families will now be claiming their full Child Tax Credit payment as they would a tax refund, in one lump sum.

How can Puerto Rican residents claim the Child Tax Credit?

If you are a resident of Puerto Rico without taxable income (meaning you are not required to fill out a U.S. income tax return), you need to file Form 1040-SS with the IRS to claim your additional Child Tax Credit funds.

To make this process as convenient as possible for Puerto Rican residents, TaxAct® has created a helpful online portal to aid families who qualify for these expanded payments.

How long will the expanded CTC be available in Puerto Rico?

The American Rescue Plan only guarantees this enhanced CTC for Puerto Rican families through the 2021 tax year at this time; however, there has been discussion between lawmakers to potentially extend the credit through 2025.

 

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