Letter 6419 Child Tax Credit and married couples who are divorcing filing seperate

[LindeyW619]

My friend wants me to help her do her taxes. Her and her husband are divorcing the divorce isn't final yet, they haven't lived together all year. She got letter 6419 in the mail showing half of the child tax credit payments. Her husband will be claiming their daughter on his return and he received the full amount. Two questions does she file married but separate or single because they haven't lived together all year and no longer share a bank account? Also if he is claiming their daughter I read he could quite possibly file as head of household on his return. If he is claiming the child and received the full monthly payment should he put he got the full $1500 and she should put 0 because only one parent can claim the child and she isn't claiming her? I can't seem to find anything about this situation online. 

[xmasbaby0]

Your friend has to enter the amount from her own letter 6419 on her own tax return.   Depending on her 2021 income she may or may not have to pay it back if she is not claiming the child on her 2021 return.   Her soon to be ex-spouse can get the full amount on his return---or the other half depending on whether he has a letter 6419 himself.   She does not have to be concerned with what he gets.   

Since they are not divorced yet their filing choices for 2021 are married filing jointly or married filing separately.  She cannot file Single unless they are in one of the handful of states that recognize legal separation and they have gone through the court system to have legal separation.   If the spouse is the custodial parent then he can file as HOH.

TurboTax calculates the Repayment Protection.  This determines if a person is required to repay the advance CTC.

What is Repayment Protection?

Repayment protection is an income-based program that reduces the amount of excess advance Child Tax Credit payments you have to repay.

Full repayment protection equals $2,000, multiplied by the following:

• The number of qualifying children that the IRS took into account when estimating your advance Child Tax Credit payments, minus
• The number of qualifying children you’re claiming on your 2021 tax return.

To be eligible for full repayment protection, your adjusted gross income (AGI) for the 2021 tax year must be at or below the following:

• $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 you are married and filing a separate return. 

 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.

For information on the definition of modified AGI, see Topic C: Calculation of the 2021 Child Tax Credit. 

Your friend needs to understand for future reference that the IRS cares about who the child lives with as far as who can claim the child as a dependent.   That is the parent with whom the child spends the most nights.

If there is a signed Form 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.