About child depend credit

[mjbak01]

Good afternoon I have 3 kids age 10, 9 and 1 and I only receive $500

[Sandyln]

Welcome to our Community!!!!

Advanced Child Tax Credit

Only applicable for 2021.  In addition to the expansion of CTC, the IRS will be sending advanced payments starting July 1 (you can opt out).  Note that as of the writing of this section the IRS is still determining the process to implement for this so this recap is based on the Act and not on any known information.

Here are the highlights of the program:

• IRS will have a portal to track and opt out of the advance payment
• Advance payments will be made on the most recently filed tax return up to 2 preceding tax years.  The ages of the dependents will be adjusted accordingly.  If the payments are based on older years then as the subsequent returns are filed the amount will be adjusted accordingly.
• If 2018 is the last tax return filed then the advance is based on that income and those dependents until a 2019 or 2020 tax return is filed.
• Adjustments can both increase or reduce the amount of a monthly payment
• If no tax return info, similar to Stimulus Checks will use info they have at hand for things like SSI
• The portal will allow for updates to account for newly added dependents, marital status, income changes 
• The amount of the advance is 50% of the calculated CTC.
• Should be even payments unless adjusted mid-year
• The monthly payment is technically 1/12 of the amount of the advance but because the program is starting in July it will calculate at ⅙ of the amount.
• The advance is protected from offsets (known as being an exception to offsets)
• The IRS will issue a statement of payments by Jan 31, 2022
• The Advance will be reconciled on the 2022 tax return and any excess amount received will be “paid back”.  For example, received $3,000 in advance but only have $2,000 (after phase outs) of CTC $1000 would be paid back. (see Safe Harbor below)

  Advanced Child Tax Credit Safe Harbor

  Note that there is a Safe Harbor (not having to pay back the excess advance) for the following income ranges:  MFJ or QW $60,000, HOH $50,000, SGL or MFS $40,000.  The calculation for the amount to be paid back is rateable from the base limit to 200% of the base limit.  Safe Harbor only applies if the number of qualified children for the Advanced CTC was greater than the number of qualified children claimed on the 2021 tax return.

  My suggestion would be to the IRS Advance Portal: 

  https://www.irs.gov/credits-deductions/child-tax-credit-update-portal

  the Child Tax Credit Eligibility Assistant Website:

  https://www.irs.gov/credits-deductions/advance-child-tax-credit-eligibility-assistant

  And lastly the Advance Child Tax Credit Payments in 2021 Website:

  https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021