You are correct, you will not report more than what was actually received, which is $7,000 per your statement above. The following total amount is what is allowed for each child based on age, and the advance was expected to be no more than half of what would be allowed on the tax return for 2021.
- $3,600 per qualifying child under 6
- $3,000 per qualifying child age 6–17
The IRS will know the combined amount and will have a structure in place to identify it. You can allocate to each of you based on what you would have received for your own children. It is not yet clear, because they have not had time to post exactly how they want a situation like yours to be handled.
You can always mail your returns with a copy of your letter and an explanation about how it was divided. Do not mail the returns together in the same envelope if you decide to file by mail.
As indicated above, you might consider waiting just a bit longer before finalizing and filing your returns.
Lastly, both of you should update your information in the IRS Portal.
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