The Child Tax Credit (CTC) is a deduction from federal income tax payments designed to help working families with young children. In the past, Puerto Rico residents were not eligible for this tax credit. Under President Biden, it was extended to Puerto Rico. Child Tax Credits for Puerto Rico are available again for tax year 2025. However, it is not automatic. You must take action to receive this benefit.
How does the CTC work?
The credit allows a reduction in the taxes people pay, up to $2,200 for each dependent child under 17 in tax year 2025 (the year you’d file for in 2026). A family with one child which owes $2,200 in income tax will pay nothing.
What’s more, it’s refundable up to $1,700. This means that if you have one dependent child under 17 and owe just $500 in taxes, you would receive a payment from the federal government for $1,200.
Are you eligible?
- You must file for federal income tax. You will use a Form 1040-SS or Form 1040-PR. You can get assistance for free by calling the IRS Taxpayer Assistance Center (TAC) at 844-545-5640. Filing for income taxes only in the territory will not allow you to claim this deduction.
- The child or children you list on your income tax form must have a Social Security number and must live with you for more than half the year.
- Single people earning over $200,000 and married people filing jointly with an adjusted income over $400,000 will receive less credit. For most bona fide residents of Puerto Rico, this applies to wages earned outside of Puerto Rico only. Earnings in Puerto Rico for employees of the federal government do count.
If you are eligible, make sure to file your Form 1040, whether you have taxable income or not, if you are eligible for the Child Tax Credit.
Is there a catch?
Sometimes people who receive federal benefits worry that accepting the Child Tax Credit will affect their federal benefits. It will not. Other people may worry that filing for federal income tax will cause the federal government to tax their Puerto Rico-earned income. It will not.
There is no catch.
From a wider vantage point, there is a little bit of a catch to the Child Credit Tax. The extension of Child Tax Credits for Puerto Rico families resulted from a vote in Congress. A future Congress can take it away again, even if the states continue to receive it. Statehood would mean equal rights in federal taxes and the ability to set state and local taxes under local governments.
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