Yes ... this is a LEGAL double dipping ... the parents got the advance (which doesn't need to be paid back) and the child gets the RRC on the 2021 return. This same situation happened last year when the first 2 stimulus payments were reconciled on the 2020 return.
This also happened when one parent claimed the child on the 2020 return and got the advance CTC based on the 2020 return but then the other parent claimed the CTC on the 2021 return ... another legal loophole. In this situation, the parent who got the advance may need to repay some or all of the advance depending on their income ... this is why the IRS made an option available to OPT OUT of the advance payments which many took advantage of if they were not going to claim the child on the 2021 return.
