Child tax credit

[Mstout82]

My Ex received all the stimulus since they claimed my child the last 2 years.  They are now getting the monthly$250 child credit.   I am claiming them this year, how will that affect my tax return for this year? Also, do both parties have to opt out of the monthly credit and if my Ex does not opt out, how does that affect me?

[fkbright]

Thank you for asking this question - I hope this answer will help you!

Since you are claiming the child this year you will be able to receive the child tax credit when you file your tax return.  It should not be affected by any payment your ex-spouse received.   

The advanced payments are based on the prior year return, so your ex spouse is receiving the payment as he claimed your child on the most recent tax return.  Your ex-spouse will likely be required to repay the amounts received as they will not be able to claim the child for the 2021 tax year.

To opt out of receiving the payments use the IRS Child Tax Credit Update Portal at  https://www.irs.gov/credits-deductions/child-tax-credit-update-portal

Only the person receiving the credit needs to take action to opt out.  To avoid having to repay the credit your ex spouse will need to do this.  

The IRS is continuing to add functions to this site and later this summer it may have the ability for you to update your information and receive the advance payment.  Please remember the payments are an advance of the tax credit so you will be eligible to receive the full amount when you file your 2021 taxes.

[Lloyd7]

Dear Ms. Tout:

Thank you for trusting TurboTax to help with your tax questions. The rules for the new Child Tax Credit Advance are new and may be hard to follow. I will break it down in terms as simple as I possibly can. There are several rules that apply in your situation. Let's look at each one separately.

1. You must qualify for the Child Tax Credit. Assuming that the following requirements are true in your situation and your qualifying child lives with you 183 nights, you will qualify to receive the credit. 

To qualify for the Child Tax Credit, you must have a child or dependent who meets all of the following requirements:

• Age: The child must have been 16 or younger on December 31 of the tax year.
• Citizenship: The child must be a United States citizen, a United States national, or a resident alien.
• Dependent: The child must be claimed as a dependent on your tax return. See the free eFile.com DEPENDucator if you are not sure if someone qualifies as a dependent.
• Relationship: The child must be related to you in one of the following ways: son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister, grandchild, niece, or nephew. This includes any legally adopted child, any child lawfully placed with you in preparation for adoption, and any foster child lawfully placed in your care.
• Residency: The child must have lived with you for more than half of the year (stayed with you for at least 183 nights). Temporary absences for special circumstances are generally acceptable and special rules may apply if you are divorced or for other certain circumstances.
• Support: The child must NOT have provided more than half of his or her own financial support for the year.

2. If you qualify to receive the Child Tax Credit in 2021, your spouse should opt out of the advanced payments during 2021. Otherwise, the credit that you receive through your 2021 Tax Return will initially be reduced by the amount that your spouse has received. The amount of the Child Tax Credit Advance is intended to be one half of the credit that you may qualify for, so you should receive at least half of the credit through your Tax return, even if your spouse does not opt out of receiving the advanced payments. 

3. In addition, you and your Ex-Spouse may qualify for "Repayment Protection", meaning that the Child Tax Credit Advance Payments may NOT have to be paid back if your income level qualifies. These are the limiting rules:

      a. You qualify for full repayment protection and won’t need to repay any excess amount if your main home was in the United States for more than half of 2021 and your modified adjusted gross income (AGI) for 2021 is at or below the following amount based on the filing status on your 2021 tax return:

• $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 are married and filing a separate return.

      b. Your repayment protection may be limited if your modified AGI exceeds these amounts or your main home was not in the United States for more than half of 2021.

      c. 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.

      d. You may be able to calculate your Child Tax Credit at this IRS website:  https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-t...    

Thank you again for trusting TurboTax with your tax questions. I hope this helps! Please feel free to ask another question if you should need more information! 

Have a blessed day! Lloyd7

[mfields2]

If your income is less than $200,000, the child tax credit will be an offset of the taxes you pay or an increase in the refund you receive. The total amount of child tax credit is $3,000 for school aged kids (between 6-17) PER CHILD.  The advance child tax credit is just an advance on the credit you would eventually receive on your tax return, so you can "opt out" of those payments if you do not want to receive them.

Your ex - if they are receiving the advance child tax credit with no children on his 2021 return - will have to pay the advance child tax credit money back, if he makes over the income threshold for repayment ($40,000 single, $60,000 married).

You can update your information on the Child Tax Credit Update Portal here: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal to start receiving payments "early" - if you would like.