Deductions & credits

Dear Ms. Tout:

Thank you for trusting TurboTax to help with your tax questions. The rules for the new Child Tax Credit Advance are new and may be hard to follow. I will break it down in terms as simple as I possibly can. There are several rules that apply in your situation. Let's look at each one separately.

1. You must qualify for the Child Tax Credit. Assuming that the following requirements are true in your situation and your qualifying child lives with you 183 nights, you will qualify to receive the credit. 

To qualify for the Child Tax Credit, you must have a child or dependent who meets all of the following requirements:

• Age: The child must have been 16 or younger on December 31 of the tax year.
• Citizenship: The child must be a United States citizen, a United States national, or a resident alien.
• Dependent: The child must be claimed as a dependent on your tax return. See the free eFile.com DEPENDucator if you are not sure if someone qualifies as a dependent.
• Relationship: The child must be related to you in one of the following ways: son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister, grandchild, niece, or nephew. This includes any legally adopted child, any child lawfully placed with you in preparation for adoption, and any foster child lawfully placed in your care.
• Residency: The child must have lived with you for more than half of the year (stayed with you for at least 183 nights). Temporary absences for special circumstances are generally acceptable and special rules may apply if you are divorced or for other certain circumstances.
• Support: The child must NOT have provided more than half of his or her own financial support for the year.

2. If you qualify to receive the Child Tax Credit in 2021, your spouse should opt out of the advanced payments during 2021. Otherwise, the credit that you receive through your 2021 Tax Return will initially be reduced by the amount that your spouse has received. The amount of the Child Tax Credit Advance is intended to be one half of the credit that you may qualify for, so you should receive at least half of the credit through your Tax return, even if your spouse does not opt out of receiving the advanced payments. 

3. In addition, you and your Ex-Spouse may qualify for "Repayment Protection", meaning that the Child Tax Credit Advance Payments may NOT have to be paid back if your income level qualifies. These are the limiting rules:

      a. You qualify for full repayment protection and won’t need to repay any excess amount if your main home was in the United States for more than half of 2021 and your modified adjusted gross income (AGI) for 2021 is at or below the following amount based on the filing status on your 2021 tax return:

• $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.

      b. Your repayment protection may be limited if your modified AGI exceeds these amounts or your main home was not in the United States for more than half of 2021.

      c. You won’t qualify for any repayment protection if your modified AGI is at or above the amounts listed below based on the filing status on your 2021 tax return.

• $120,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
• $100,000 if you are filing as head of household; and
• $80,000 if you are a single filer or are married and filing a separate return.

      d. You may be able to calculate your Child Tax Credit at this IRS website:  https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-t...    

Thank you again for trusting TurboTax with your tax questions. I hope this helps! Please feel free to ask another question if you should need more information! 

Have a blessed day! Lloyd7