Instructions for 2020 Schedule 8812

The 2020 Schedule 8812, “Credits for Qualifying Children and Other Dependents,” was used to calculate several tax credits for the 2020 tax year. It determined a filer’s eligibility for the Child Tax Credit (CTC), the refundable Additional Child Tax Credit (ACTC), and the Credit for Other Dependents (ODC). The rules for the 2020 tax year were distinct from the temporary expansion of the Child Tax Credit that occurred in 2021. This form was a required attachment to Form 1040 for anyone claiming these credits.

Determining Your Qualifying Persons

To claim the Child Tax Credit for 2020, an individual had to be your qualifying child, which required meeting five tests.

• The child must be your son, daughter, stepchild, foster child, brother, sister, or a descendant of any of them.
• The child must have been under the age of 17 at the close of 2020.
• The child must have lived with you for more than half of the year.
• The child could not have provided more than half of their own financial support during the year.
• The child could not file a joint return for the year, unless it was only to claim a refund of withheld income tax or estimated tax paid.

The Credit for Other Dependents was available for individuals who met dependency requirements but did not satisfy the criteria for a qualifying child. This included children who were 17 or older at the end of the tax year or qualifying relatives, such as an elderly parent or a disabled adult child. A person could not be claimed for both the Child Tax Credit and the Credit for Other Dependents in the same year. The dependent must also have been a U.S. citizen, U.S. national, or U.S. resident alien.

Information Needed to Complete Schedule 8812

To complete Schedule 8812, you needed several pieces of information from your 2020 tax return. You required the full name and Social Security Number (SSN) for each qualifying child, which must have been issued before the due date of the 2020 return and be valid for employment. For other dependents, a valid taxpayer identification number, such as an SSN or an Individual Taxpayer Identification Number (ITIN), was required.

Your filing status from Form 1040 and your adjusted gross income (AGI) from line 11 were needed to calculate the phase-out of the credits. You also needed your total earned income for the year, which includes wages, salaries, tips, and net earnings from self-employment. This earned income figure was used for calculating the refundable Additional Child Tax Credit.

Calculating the Credits on Schedule 8812

Part I of Schedule 8812 determined the total nonrefundable credit. The calculation began by multiplying the number of qualifying children under age 17 by $2,000 and the number of other dependents by $500. These amounts were added together for a maximum potential credit.

This maximum credit was subject to an income limitation. For 2020, the credit began to phase out for taxpayers with an AGI above $400,000 for those married filing jointly and $200,000 for all other filing statuses. The credit was reduced by $50 for each $1,000 that your AGI exceeded these thresholds. The resulting nonrefundable credit could not exceed your total tax liability from Form 1040, line 16.

Part II of Schedule 8812 was used to calculate the refundable Additional Child Tax Credit (ACTC). This credit was available to taxpayers who could not receive the full amount of their Child Tax Credit as a nonrefundable credit because their tax liability was too low. The ACTC is refundable, meaning you could receive it as a refund even if you owed no income tax.

The calculation for the ACTC was based on your earned income. For 2020, the refundable amount was calculated as 15% of your earned income exceeding $2,500, up to a maximum of $1,400 per qualifying child. Taxpayers also had the option to use their 2019 earned income to figure the ACTC if it resulted in a larger credit.

Claiming the Credits on Form 1040

Once calculations on Schedule 8812 were finished, the resulting credit amounts were transferred to the Form 1040 tax return. The nonrefundable credit, which combined the Child Tax Credit and the Credit for Other Dependents, was entered on line 19 of the 2020 Form 1040. This credit directly reduced the tax you owed, but not below zero.

The refundable Additional Child Tax Credit (ACTC) was transferred to line 28 of the 2020 Form 1040. Because this credit was refundable, it was treated as a payment, similar to federal income tax withholding. This meant it could reduce your tax liability to zero and also result in a tax refund.