Now, big questions like how to calculate your payments and how to unenroll from the payments are answered in one easy space. And this is a good thing seeing as how the government money given to families to help during the pandemic could deliver a change in potential tax refunds, depending on how much money you made.
As advance payments were estimates based on what families made in 2020, people need to be wary there could be a discrepancy.
Families could have gotten six advanced monthly payments totaling $1,800 for kids 5 and under, and up to $1,500 for those 6-17.
The expanded credit payments begin to phase out at $75,000 for individuals, $112,500 for heads of household, and $150,000 for married couples.
Get daily news, weather, and breaking news alerts straight to your inbox! Sign up for the abc27 newsletters here
Since the IRS calculated the payments based on 2020 information, households that saw an increase in income during 2021 may need to give the government some of that money back if the salary boost pushed them over a phaseout threshold.
Another possible situation that could lead to overpayment would be a divorce during 2021 that leads to an individual tax return. Anyone in this situation should make sure that their individual tax return doesn’t push them over the phaseout threshold.
So will you need to give back cash if your advanced child tax credit money turned out to be more than you qualified for? Maybe. You can qualify for full repayment protection if your main home was in the U.S. for over half of 2021 and your modified adjusted gross income for the same year was at or below the following:
- $60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
- $50,000 if you are filing as head of household; and
- $40,000 if you are a single filer or are married and filing a separate return.
The IRS phases out repayment protection above those income levels, with $0 protection at or above these modified AGI amounts:
- $120,000 if married and filing a joint return or if filing as a qualifying widow or widower;
- $100,000 if filing as head of household; or
- $80,000 if you are a single filer or are married and filing a separate return.
For those taxpayers who have to repay excess child tax credit funds, the money will be deducted first from any expected federal refund check. People who owe more than their refund check are encouraged to check the IRS site for your full payment options.
Not sure exactly how much advanced child tax credit money you received in 2021? In January, the IRS will send out Letter 6419 that will specify the total amount disbursed to you for reference when filing your return.
Taxpayers also need to be on the lookout for separate letters from the IRS coming this month discussing not only the child tax credit payment but also any stimulus checks. When those arrive, do not throw them away; they should break down how much money was given to you.
As the IRS is reportedly still behind on some tax filings from 2020 (a reported 6.3 million were still unprocessed as of Dec. 18), it’s imperative to fill out the forms as correctly as possible to receive any refunds in a timely manner.
Find the whole new child tax credit FAQ sheet right here.
Find out more about filing your tax returns, which are due on April 18, right here.