Families in Puerto Rico now have full access to the dependent child tax credit — after they file federal income tax forms to claim it.
The Child Tax Credit is a refundable credit, which means that it is paid to parents even if they do not earn enough to pay income taxes.
Until 2021, Puerto Rican families could only claim the Child Tax Credit (CTC) for a third child. In the States, parents can claim the CTC for all children. Since the average household in Puerto Rico consists of less than three children, few families could receive any benefit at all.
Now the credit is available to families in Puerto Rico beginning with their first child. They can claim it by filing form 1040, the federal income tax form.
American Rescue Plan
Under the terms of legislation enacted in March of 2021 – the American Rescue Plan – Puerto Rican families will be eligible to receive $3,600 for each child in the family age six and under, and $3,000 for those ages 6 to 17 provided that they file a federal income tax form by April 15, 2022.
When the CTC returns to its former level of $2,000 per child, currently expected to occur for the April 2023 tax season, all children in Puerto Rico will nonetheless remain covered.
“Make no mistake, this is a historic breakthrough in our fight for equal treatment as American citizens,” Governor Pierluisi said in a press release when the bill was passed. “The full Child Tax Credit will encourage economic growth, support Puerto Rican families, and strengthen our communities.”
How to get the credit
Families in Puerto Rico can claim this credit even if they had no earnings and paid no social security taxes. However, they must file a version of the federal income tax form, 1040:
Bona fide residents of Puerto Rico are not required to pay federal income tax on earnings sourced in Puerto Rico, and the new filings will not cause parents to owe taxes.
Filing the 1040 form will only make it possible to claim the Child Tax Credit.
Parents must fill out the forms and file federal income taxes to obtain the U.S. money that is owed to them. This can be done for free with an online service such as efile.com. However, the federal government does not accept electronic filings from Puerto Rico, so the return must be printed and mailed.
Since the new tax credit is permanent, experts advise that learning the process this year will maximize benefits and equip eligible recipients with the knowledge and expertise to continue to benefit under the new U.S. law.
Volunteer tax help may be available in Puerto Rico through Volunteer Income Tax Assistance (VITA).