Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
Luckalaska
Level 1

What are the risks to taking the tax credit now instead of waiting until next April?

Hi there,

 

Thank you for putting this together. My question is this, what are the risks to taking the child credit now instead of waiting until April of next year to receive the full amount? Are there any? Personally, I would prefer to have the money in my pocket to use over the next few months rather than waiting for the one lump sum in another year. 

 

But wanted to check with the experts to see if I missed something as far as risk goes. 

 

Thank you, 

 

1 Best answer

Accepted Solutions
VincentL12345
Employee Tax & Finance Expert

What are the risks to taking the tax credit now instead of waiting until next April?

When you file your 2021 tax return during the 2022 tax filing season, you will need to compare:

  1. The total amount of the advance Child Tax Credit payments that you received during 2021; with
  2. The amount of the Child Tax Credit that you can properly claim on your 2021 tax return.

Excess Child Tax Credit Amount: If the amount of your Child Tax Credit exceeds the total amount of your advance Child Tax Credit payments, you can claim the remaining amount of your Child Tax Credit on your 2021 tax return.

Excess Advance Child Tax Credit Payment Amount: If you receive a total amount of advance Child Tax Credit payments that exceeds the amount of Child Tax Credit that you can properly claim on your 2021 tax year, you may need to repay to the IRS some or all of that excess payment.

In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

2 Replies
VincentL12345
Employee Tax & Finance Expert

What are the risks to taking the tax credit now instead of waiting until next April?

When you file your 2021 tax return during the 2022 tax filing season, you will need to compare:

  1. The total amount of the advance Child Tax Credit payments that you received during 2021; with
  2. The amount of the Child Tax Credit that you can properly claim on your 2021 tax return.

Excess Child Tax Credit Amount: If the amount of your Child Tax Credit exceeds the total amount of your advance Child Tax Credit payments, you can claim the remaining amount of your Child Tax Credit on your 2021 tax return.

Excess Advance Child Tax Credit Payment Amount: If you receive a total amount of advance Child Tax Credit payments that exceeds the amount of Child Tax Credit that you can properly claim on your 2021 tax year, you may need to repay to the IRS some or all of that excess payment.

In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Luckalaska
Level 1

What are the risks to taking the tax credit now instead of waiting until next April?

So the risk is being overpaid and maybe owing to the IRS more than anticipated. 

 

I have 2 children under the age of 6, so I do not think it will be an issue. Thank you for the response. 

Dynamic AdsDynamic Ads
Privacy Settings
v