Did you receive $250/month per child in advance child tax credit this past year? That could affect how you file your taxes this year, and whether you will receive any child tax credit back or must pay some in. The money issued monthly in 2021 was an advancement on the child tax credit those with dependent children receive each year. No doubt that was very helpful for many families, but how will it affect your tax return this year?
According to the IRS website, you can check to see if what you received in advance child tax credit aligns with what you would have been able to receive. If there is a deficit you will receive the difference. If the amount you received throughout the year was more than what you would have received, you will owe a repayment.
From the IRS website:
- Excess Child Tax Credit Amount: If the amount of your Child Tax Credit exceeds the total amount of your advance Child Tax Credit payments, you can claim the remaining amount of your Child Tax Credit on your 2021 tax return.
- Excess Advance Child Tax Credit Payment Amount: If you received a total amount of advance Child Tax Credit payments that exceeds the amount of Child Tax Credit that you can properly claim on your 2021 tax year, you may need to repay to the IRS some or all of that excess payment.
In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.
The good news is the child tax credit increased in 2021. According to the IRS website for tax year 2021, the Child Tax Credit increased from $2,000 per qualifying child to:
- $3,600 for children ages 5 and under at the end of 2021; and
- $3,000 for children ages 6 through 17 at the end of 2021.
If you make $150,000 filing jointly or $112,000 filing as head of household your child tax credit limit can be reduced to the previous $2,000. You can find out more about how to calculate what you received in advance child income credit with what you would have been owed on this IRS fact sheet: www.irs.gov/credits-deductions