Information On Advanced Child Tax Credit
The IRS will soon be sending out advanced child tax credit payments for children up to age 17 beginning in July through December. Please keep track of payments since the advance payments will be used to calculate the child tax credit on your 2021 tax return.
The advance payments will reduce the amount of child tax credit on your 2021 tax return.
Example:
If you qualify for $3000 of child tax credit on your tax return and receive $1800 in advanced payments your credit will be reduced on your return to $1200 ($3000-$1800).
The payments will be based on the 2020 tax filing or 2019 tax filing it 2020 has not been filed yet. The tax child tax credit is subject to income phase out for MFJ $150000, HH $112500 and S $75000.
If you’re looking at an increase in income for 2021 and the advanced payments are based on prior filing you could possibly end up having to pay some back.
If you claimed your child on prior return and will not be claiming child on 2021 do not take advance payments or you may have to pay back.
The IRS has indicated that they will have a portal set up by July 1 if you want to opt out of receiving the payments or if you want to update your information if your circumstances have changed from a prior filing.