Will parents have to reimburse early childhood tax credit payments? Here is what you need to know


If your circumstances change this year, you may need to withdraw from child tax credit payments to avoid reimbursing the IRS.

Sarah Tew / CNET

This year expanded child tax credit comes with more money sooner than usual. It’s a sweet surprise for eligible families. For example, each child under 6 is now entitled to up to $ 3,600 instead of $ 2,000. And now parents get the first half of the credit through advance monthly payments from July to December. They will have the option to opt out now to receive the full credit when filing taxes in 2022. But how will those monthly advance payments this year affect next year’s taxes? Does accepting the money now mean you’ll get less on next year’s tax return? Or worse yet, will you have to reimburse the IRS?

This is how it works. The IRS bases your monthly child tax credit payment amount on your 2019 or 2020 tax return. Of course, there are a lot of things that could change between tax seasons – for example, an increase salary or a dependent aging out of an eligibility bracket. Some changes may mean you are no longer eligible and may owe the IRS money when an adjustment is made next year. One way to prevent this from happening is to update the changes using IRS online tools. You will soon be able to use a designated portal for the child tax credit do this.

Right now, the best way to avoid paying the IRS is to refuse advance payments. here’s how. The next deadline is Monday August 30. so many moving parts it can get confusing quickly, but the IRS has resources to help you check your eligibility, unsubscribe from monthly checks and more. We will explain how estimate how much money you will get, how you can prepare now to avoid owing the IRS later, and what non-filing parents should know about credit in order to they can sign up for payments. This story was recently updated.

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Child tax credit: everything we know


Will I owe the IRS next year for my 2021 child tax credit checks?

The short answer is no, but you still need to know some financial details. Child tax credit checks don’t count as income, so you won’t have to pay tax on payments, Mark Jaeger, vice president of tax operations at Tax law, told CNET. The IRS calls these checks “prepayments” ahead of the 2021 tax season: “It means you just receive the payments sooner rather than waiting to receive that money when you file. “

Although you won’t pay taxes in 2022 on payments you receive this year, you may have to repay part of the “early” payment to the IRS when you file your tax return in 2022.

Will I have to reimburse if I receive more money than I am entitled to?

Perhaps. Unless you unsubscribe or unsubscribeThe monthly child tax credit payments will automatically get you half of your estimated amount that year from the IRS. Forgoing monthly payments means that instead of receiving seven smaller payments – six in 2021 and one in 2022 – you will only receive one large payment when you file your tax return in 2022.

If for some reason you get a higher child tax credit than you are actually entitled to, you may need to return some of the money to the IRS next year. This could be the case in the following scenarios:

  • If someone in your household gets a higher paying job this year, increase the adjusted gross income and push yourself up or out of a previous income bracket.
  • If any of your dependents age of an age range this year. For example, if your 5-year-old turns 6 in 2021, that would entitle you to a smaller payment. Or if your 17-year-old turns 18 in 2021, you would no longer be eligible for monthly payments.
  • If there is a change of guard. Two examples: if the parents divorce and have a shared custody arrangement, or if the custodial parent changes from year to year. In one shared custody situation, only one parent can claim the credit for a given child.

These types of changes in circumstances are one of the main reasons the IRS gives people the option to opt out of advance payments.

How do you avoid having to pay the IRS?

To reduce the risk of receiving an overpayment this year, later this summer you will be able to update the IRS with your current family situation using the child tax credit portal. (The updated categories for marital status, dependents, and income are not yet available, but they will be later.) You should continue to keep the IRS informed of family changes until the end of 2021.

Know that if the household is adjusted gross income, or AGI, for 2021 is below a defined income level, you probably won’t owe the IRS anything, even if you received more child tax credit money than you technically should have. This is what the IRS calls “refund protection“so that low-income families do not have to repay money. Above a certain income level, the amount you have to repay increases, or gradually, until you owe the money. complete refund.

A letter the IRS will send to you in January 2022 will help you determine if you’ve received an overpayment and whether you need to repay some or all of the down payments. See below for more on this letter.

Income limits for the repayment of child tax credit payments

Filing status

Qualify for full refund protection

Repayment protection is gradually disappearing

Sole depositor

Up to $ 40,000

Over $ 80,000

Deposit as head of household

Up to $ 50,000

Over $ 100,000

Married filing a joint return

Up to $ 60,000

Over $ 120,000

Will I need to report my child tax credit payments when I file my taxes next year?


In January 2022, the IRS will send families who received child tax credit payments a letter with the total amount of money they received in 2021. Keep this notice – what the IRS calls it Letter 6419 – you will need it when you file your 2021 tax return during next year’s tax season. (It is not the same letter the IRS sends this year on payments.)

To make sure the IRS has your most recent mailing address, you can update it through the Child Tax Credit Update Portal in the coming months, the IRS said. You can also change address via postal service.


You will receive the second half of your child’s tax money when you file your taxes next year.

Sarah Tew / CNET

Will I get more child tax credit money in 2022 after I file taxes?

Yes. After comparing the information in the letter the IRS sends you in January 2022 with what you are entitled to, you may find that you owe more than what you received in advances, based on your actual income. from 2021. If so, you can claim the remaining amount your child tax credit when you file your return.

Does the child tax credit money affect other federal benefits?

According to the IRS, no. Because child tax credit advance payments do not count as income, federal, state, or local agencies cannot use the amount to determine whether you or your family qualify for other benefits or assistance.

For more financial benefits this year, here’s how to save money on child care expenses and health expenditure.

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