Child Tax Credit and Joint Custody

[amy381]

My ex and I share custody of our son and alternate the years we claim him on our taxes. Since I claimed our son most recently, the IRS sent the first advance child tax credit payment to me, even though my ex will be claiming him this tax season. I have since unenrolled from receiving all future payments. How do I handle the first payment I received? 

[conniem123]

Great job tax planning and unenrolling your son for the 2021 advance Child Tax Credit payments!

When you file your 2021 tax return during the 2022 tax filing season, you will need to compare:

1. The total amount of the advance Child Tax Credit payments that you received during 2021; with
2. The amount of the Child Tax Credit that you can properly claim on your 2021 tax return.

Excess Advance Child Tax Credit Payment Amount: If you receive a total amount of advance Child Tax Credit payments that exceeds the amount of Child Tax Credit that you can properly claim on your 2021 tax year, you may need to repay to the IRS some or all of that excess payment.

In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.

Notice above the "may need to repay".

Your repayment protection amount will decrease based on how much your modified adjusted gross income (AGI) is greater than the following amounts 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.

This repayment protection amount is then phased out – or reduced – as your modified AGI exceeds the amount above. Your repayment protection amount will equal $0 and your repayment amount will not be reduced when your modified AGI is at or above this higher amount based on the filing status on your 2021 tax return:

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

[R-SchuleCPA]

The best advice at this point in time is that over/underpayments of CTC will be handled on your 2021 Tax Return, so unfortunately any excess payment will have to be paid back through your tax return. See below link for more information.

Reconciling CTC Payments

[conniem123]

There is repayment protection based on your 2021 adjusted gross income.  

 Your repayment protection amount will decrease based on how much your modified adjusted gross income (AGI) is greater than the following amounts 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.

This repayment protection amount is then phased out – or reduced – as your modified AGI exceeds the amount above. Your repayment protection amount will equal $0 and your repayment amount will not be reduced when your modified AGI is at or above this higher amount based on the filing status on your 2021 tax return:

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