Child tax credit - alternating years claiming child

[Kflennor]

Are there any documents on how to handle the monthly payments for divorced parents who alternate years claiming child? 

[Sandyln]

Welcome to our community!!!

Claiming the Child tax credit in alternating is going to be an issue because the advance credits will be based on 2020 tax returns, or the most recent year the IRS has on file. Technically, though, the parent claiming the dependents for 2021 should get the payments, which can complicate things if the parents alternate years.

For example: If Parent A claimed the child in 2020 but Parent B will claim him or her in 2021, Parent A will still get the advance payments, which means they may want to go ahead and waive them future tax payments because there’s a risk that if you’ll have to repay it in the 2021 tax season. 

There is some other reasons my may not have to pay it back because of a safe harbor, which depends on income: Individuals making less than $40,000 ($60,000 for couples filing jointly) who receive an overpayment of the credit will not need to repay it.

Parents can opt out of the payments using the IRS’s online portal.  The parent who was not the custodian last year but is this year will be able to use the portal to update information on their qualifying children to get the advanced monthly payments, according to the IRS. 

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

[Kflennor]

Will the parent claiming next year get the credit as well since they did not receive the monthly payments? 

[Sandyln]

Hello Again!!!

Yes the parent who is claiming the children in 2021 will get the Child Tax Credit on the 2021 Tax Return. That is why it is critical for the parent not claiming the to opt out. 

That way the parent who is not claiming the children will not have to pay the money back.