Child Tax Credit

[whitakerbg]

Should I be concerned about receiving the monthly child tax credit? If I do not opt out, how will that affect my refund next year?

[xmasbaby0]

If you do not opt out then you get half the CTC before the end of 2021 and the other half on your 2021 tax return.   The amount of the credit is the same; it is just a matter of WHEN you receive it.

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

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

[whitakerbg]

So, if I generally receive a refund, I should still receive one next year even if I do not opt out. Is that right? 

[xmasbaby0]

Yes that is correct.   Half of the child tax credit is refundable so you will still have a child tax credit amount on your tax return.  Any other refund will be based on withholdings, etc. or earned income credit if you qualify.

[Hal_Al]

Q.  So, if I generally receive a refund, I should still receive one next year even if I do not opt out. Is that right? 

A. Simple answer:  Yes.

But taxes aren't simple.  The Child Tax Credit (CTC) increased from $2000 to $3000  ($3600 for children under 6).  So if you get half that $3000 in advance; that means you'll get $1500 next year when you file your tax return.  So, the simple answer is your refund will be $500 less next year.  That assumes you got the full $2000 the previous year.  Another change for 2021 is that the  CTC is fully refundable.  That is, not everybody got the full $2000 in the past.  They will get the full $3000 for 2021 (unless their income is very very high), half in advance payments and half a tax filing time. 

[Tax_filer_1803]

Hi,

I have 2 kids aged 10 and 3 and I'm using TurboTax deluxe desktop version. Ideally, total credit I should be getting is $6,600 however on form Schedule 8812 line 7 , turbo tax is incorrectly calculating eligible limit to be $6000. I already checked for any pending software updates but it seems to be upto date. Is it a bug in TurboTax deluxe version??

[DoninGA]

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@Tax_filer_1803 wrote:

Hi,

I have 2 kids aged 10 and 3 and I'm using TurboTax deluxe desktop version. Ideally, total credit I should be getting is $6,600 however on form Schedule 8812 line 7 , turbo tax is incorrectly calculating eligible limit to be $6000. I already checked for any pending software updates but it seems to be upto date. Is it a bug in TurboTax deluxe version??

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For the 3 year old, go back to My Info using the online editions or Personal Info using the desktop edition and verify the date of birth for the child.  If the date of birth is correct and you are not seeing the correct amount of $3,600 for the child tax credit when completing the child's information, then delete the child as a dependent and re-enter.  This should correct the problem.

[Tax_filer_1803]

Thanks Donin but the issue persists. I tried by deleting both of my kids & then reentering them one by one. I noticed the issue is not with 3 yr old but the 10 yr old. When I first entered info of my 10 yr old, form 8812 only provides credit of  $2,400 (instead of $3,000) which is why there is a total of $600 incorrect difference in calculating child tax credit. How can we fix this issue? Is it a bug in Turbo tax?

[DoninGA]

@Tax_filer_1803 

Are you filing as Married Filing Jointly and your 2021 Adjusted Gross Income is more than $150,000?

If so, the Child Tax Credit will be reduced.

Go to this IRS website for information - https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-t...

A4. The Child Tax Credit begins to be reduced to $2,000 per child if your modified AGI in 2021 exceeds:

• $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
• $112,500 if filing as head of household; or
• $75,000 if you are a single filer or are married and filing a separate return.

The first phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

[Tax_filer_1803]

Thanks Donin. That helps to clarify it. I somehow was under impression  that it's an age specific flat amount of child tax credit irrespective of your income. Thanks again.