Based on IRM 21.8.1.6.3.3 (03-10-2022)

FAQ 1: What is the Additional Child Tax Credit (ACTC)?

The Additional Child Tax Credit (ACTC) is a benefit for qualifying taxpayers who get a refund if their Child Tax Credit exceeds their tax liability. This means that if your Child Tax Credit is more than the amount of tax you owe, you may be eligible to receive the difference as a refund. This concept is related to tax years prior to 2021. For information on tax year 2021, see IRM 21.8.1.6.4.

FAQ 2: Who qualifies for the Additional Child Tax Credit in Puerto Rico?

Taxpayers qualify for the ACTC if they meet the following criteria:

• They are bona fide residents of Puerto Rico for the tax year.
• They have social security and Medicare taxes withheld from their wages, or they paid self-employment tax.
• For tax years 2020 and prior, they have three or more qualifying children with valid taxpayer identification numbers (TIN). This requirement does not apply for tax year 2021 or any later years.

FAQ 3: How do I claim the Additional Child Tax Credit if I live in Puerto Rico?

Residents of Puerto Rico can claim the ACTC directly on their tax return by filing Form 1040-PR and completing Parts I and II. It’s not necessary to use Schedule 8812 when filing with Form 1040-PR or Form 1040-SS.

FAQ 4: What qualifies a child for the Additional Child Tax Credit?

A qualifying child is a child who:

• Is a son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half- brother, half- sister, or a descendant of any of them (for example, your grandchild, niece, or nephew).
• Is under the age of 17 (over 18 for tax year 2021) at the end of the tax year.
• Is younger than the taxpayer (or the taxpayer’s spouse, if filing jointly) or is permanently and totally disabled.
• Did not provide over half of his or her own support for the tax year.
• Lived with the taxpayer for more than half of the tax year or an exception applies.
• Is not filing a joint return for the tax year or is filing a joint return for the tax year only to claim a refund of estimated or withheld taxes.
• Was a U.S. citizen, U.S. national, or a U.S. resident alien.

FAQ 5: What is Form 1040-PR?

A4. Form 1040-PR is a U.S. tax return form for self-employed individuals in Puerto Rico. If you qualify, you can claim the ACTC directly on this form by completing Parts I and II. The Schedule 8812 is not necessary when Form 1040-PR or Form 1040-SS is used.

FAQ 6: Can I file Form 1040 or Form 1040X to claim the Additional Child Tax Credit instead of Form 1040-PR or Form 1040-SS?

Yes, the IRS allows claims with Form 1040 or Form 1040X in lieu of Form 1040-PR or Form 1040-SS when the taxpayer provides specific documentation. This includes names and social security numbers (SSNs) of qualifying children, valid taxpayer identification numbers (TINs), and attached and completed Schedule 8812.

FAQ 7: Are there any exceptions or special cases related to the Additional Child Tax Credit?

Yes, for tax year 2015 and beyond, filers of Form 2555 cannot claim the ACTC. For tax year 2021, residents of Puerto Rico who are not government employees will claim the “Refundable Child Tax Credit” on Form 1040-PR or Form 1040-SS. No social security or Medicare taxes or self-employment taxes are required to claim the refundable CTC for that year.

FAQ 8: What is the Protecting Americans from Tax Hikes (PATH) Act of 2015?

The PATH Act is a law enacted in 2015 which prohibits individuals from retroactively claiming the child tax credit by amending or filing an original or supplemental return for any year in which the taxpayer, spouse, or qualifying child did not have a valid TIN issued on or before the due date or extended due date of the return. This provision applies to any return or claim filed after December 18, 2015, as well as responses to math error received after that date.

FAQ 9: How does the Additional Child Tax Credit interact with Social Security and Medicare taxes?

The Additional Child Tax Credit cannot exceed the amount of Social Security, Medicare, and Railroad Retirement tax withheld, or the allowable percentage of the self-employment tax paid. If a taxpayer has both wages and self-employment tax paid, the ACTC credit cannot exceed the amount of Social Security, Medicare, and Railroad Retirement tax withheld plus the allowable percentage of the self-employment tax paid.

FAQ 10: What documentation do I need to provide to claim the ACTC?

When claiming the ACTC with Form 1040 or Form 1040X in lieu of Form 1040-PR or Form 1040-SS, you need to provide several documents:

1. Names and Social Security Numbers (SSN) of qualifying children.
2. Valid Taxpayer Identification Number (TIN) for the primary, secondary, and dependent(s) on Form 1040/1040A.
3. Completed and attached Schedule 8812 to Form 1040/1040A.
4. Recomputed credit on Schedule 8812 verified to be the same as on Form 1040.
5. Attached Form W-2PR to Form 1040/1040-PR/1040-SS/1040-X.

By ensuring all these documents are correctly provided, you can successfully claim the ACTC.

FAQ 11: What changes were made to the ACTC in tax year 2021?

For tax year 2021, the Child Tax Credit became fully refundable for Puerto Rico residents who aren’t government employees. These taxpayers can claim the “Refundable Child Tax Credit” on Form 1040-PR or Form 1040-SS. Unlike prior years, no Social Security or Medicare taxes or self-employment taxes are needed to claim the refundable CTC for 2021. This change was part of the effort to support families during the economic challenges presented by the COVID-19 pandemic.