I divorced my wife in 2021. We have 2 kids and received the advanced child tax credits for both in my account. I then paid her for 1 child. How do I file this?

[bsta384555]

2020 taxes were filed married/jointly. 2021 filing HOH. Do I report that I received $1500 and then she can report her $1500. Do I report all $3000 and have her pay me the $1500 back?

[xmasbaby0]

If you were divorced before the end of 2021 you can only file as either Single or maybe Head of Household for 2021--depending on who has custody of the children.   You are going to receive a letter 6419 from the IRS and the amounts on that letter have to be entered carefully.   In many cases the letter shows amounts separately for each spouse.   If you received all the money in your own name and the letter shows it that way, that is how you have to enter it.   You will have to work out the confusion with your ex-wife or perhaps talk to the attorney who helped with the divorce if there is any conflict over the CTC.

Am I Head of Household?

https://ttlc.intuit.com/questions/1894553-do-i-qualify-for-head-of-household

https://ttlc.intuit.com/questions/2900097-what-is-a-qualifying-person-for-head-of-household

If you qualify as Head of Household, when you enter your filing status (single or married filing separately) into MyInfo, and then enter your qualifying dependent, TurboTax will offer HOH as your filing status.

Since you are newly divorced, you need to get an understanding of how the IRS treats child-related credits between never-married or divorced parents.

Are you the custodial parent?  Do you have an agreement with the other parent to allow the other parent to claim them--due to divorce or that you live apart and share custody?  Did one of you sign a Form 8332?

If there is a signed 8332 then the custodial parent retains the right to file as Head of Household, get earned income credit and the childcare credit.  The non-custodial parent gets the child tax credit for children under the age of 18.

As far as the IRS is concerned, the custodial parent is the one with whom the child spent the most nights during the tax year--at least 183 nights.

[Opus 17]

Each parent will get an IRS letter reporting how the IRS allocated the payments to each parent.  The IRS might have allocated all the payment to one parent, half to each, or something else.  Each parent must report on their tax return whatever was allocated to them, even if it all went into one parent's bank account and was all spent by one parent. 

Then, if a parent was allocated part of the advanced payment but does not claim a child as a dependent, they will have to repay the credit, even if the money was received and spent by the other parent.  (Unless that parent is low income and qualifies for repayment protection.)

You can't file HOH unless the children physically lived in your home more than half the nights of the year and you provided more than half their support.  Even if your divorce or custody orders says that you must share or alternate dependents, HOH can only go to the parent who had custody more than half the year AND paid more than half their household costs–HOH can't be waived or shared by a court order.  

If you are the parent who had custody more than half the year, you could claim both children as dependents and claim the full child tax credit (minus what you received) and your wife would have to re-pay the amount that the IRS has allocated to her.  Or, you could release one of the dependents to your wife using form 8332.  If you each claim one child, you will each receive credit for one child (minus the advance payments according to how they were allocated by the IRS.). If one spouse feels they are left "short" of money, that should have been addressed as part of the financial settlement in the divorce.