Child Tax Credit in a divorce

[ryan6]

My x-wife and I divorced in August of 2021. During the year, we received child tax credits through my bank account for my step daughter as she was marked as a dependent in 2020 when we filed jointly.  All money received was directly transferred to my x-wife upon payment into my account.

Now that we are divorced, and my step daughter does not live with me in addition to having no court agreement between my x-wife and myself concerning my step-daughter, do I still claim her as a dependent for 2021 and do I claim that I received the tax credit even though I transferred all of it to my x-wife?

[DanP0428]

You do not claim her as a dependent and may be asked to pay back the advance that was paid to you.  Your exwife may offer to reimburse you if that happens but is under no obligation to do that.

[Bsch4477]

You should have received letter 6419 informing you of the amount of advanced child credit you received and you will report that amount on your 2021 return. The IRS is not concerned with any agreement of transfer of those payments to your ex spouse. Since the child doesn’t live with you, she can’t be your dependent. 

[DanP0428]

I wonder if that question will ever come up when he is filing with no dependent.  I think it is only asked if you are claiming the child tax credit.

[KrisD15]

More than likely, your ex-wife will be considered the custodial parent and therefore the child would be claimed as her dependent on her return. (Because the child lived you both, but then with only your x-wife for the remainder of the year, so the child lived with your x-wife longer during the year)

You are liable for the amount reported on your letter in regards to the Advanced Child Tax Credits. 

There is a good chance you will be eligible for "Repayment Protection", but that is based on your income. 

If you are not eligible for the "Repayment Protection" you could try to work out something with your ex, since she will most likely get the full amount of the credit, including the amount of your half of the payments. Or you could try to take her back to court, but this is something the attorney should have thought about before making an agreement. 

The IRS will not step in. 

[Bsch4477]

As @KrisD15  points out taxpayers may have to pay back the credit depending on AGI.