Child Tax Credit

[cey40]

I had a foster child for 16 months.  I opted out of the child tax credit and they sent the money in two checks the first two and i gave the mother $1400 Stimlus and the two checks of the child tax credit money. which they should of put in our direct deposit as all our taxes were but they didnt. anyway i continued to click on opt out on the IRS site then after about 12 times it no longer would recognize my name and i could not contact them.  I called over and over and stayed on the line for 2 1/2 hours sometimes i finally got ahold of one man and he said it was the wrong dept of IRS so he sent me to another section by phone and they never answered after 2 1/2 hours of waiting  . I then received two more checks both were for two months at a time of child tax credit they were direct deposited and i was overdrawn and it took that money both times.  I had had my spouse die of covid and i had hard times and got my account messed up.  i didnt know that the IRS would then change and start putting those checks into my bank account changing the way they had started out paying the child tax credit.  i did not mean for any of this to happen and i tried very hard to notify the IRS many many times.  I now have the paper to pay back $1800 dollars in child tax credit taxes and i dont know where to put them on my return.  I also had paid the mother $1400 and the first two child tax credit money i cashed and gave directly to her.  These were based on mine and my husbands 2020 tax return and my spouse died Dec 23 2020.  Please let me know where i put the paper i received it said on a 8812 but i dont have the child on my tax return this year and what am i going to do  this was not my fault this happened i tried to get it stopped and tried to get it never to be sent in first place.  IRS never would answer  the phone and i needed to have imediate help with it.  I thought that the mother was going to claim the thing and she wouldnt until this year she said.  Please help me find out what to do .I am on fixed income and disability and small pension. i dont have alot of money to pay taxes on all this. and no money really but 111 coming back in Federal money either.  Thank You.

[xmasbaby0]

Oh dear.....You have had a time.....So sorry for the loss of your spouse.   You have not mentioned how much your income is ----- it is possible that you will not have to pay back that child tax credit money that was sent to you.   Did they send you letter 6419 for the advance child tax credit payments?   The IRS sends that letter to the person who received the money.   Even though you gave it to the child's mother, the IRS does not sort out things like that.   They only look at who it was sent to-----you.   

See below:

TurboTax calculates the Repayment Protection.  This determines if a person is required to repay the advance CTC.

What is Repayment Protection?

Repayment protection is an income-based program that reduces the amount of excess advance Child Tax Credit payments you have to repay.

Full repayment protection equals $2,000, multiplied by the following:

• The number of qualifying children that the IRS took into account when estimating your advance Child Tax Credit payments, minus
• The number of qualifying children you’re claiming on your 2021 tax return.

To be eligible for full repayment protection, your adjusted gross income (AGI) for the 2021 tax year must be at or below the following:

• $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 you are married and filing a separate return. 

 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.

For information on the definition of modified AGI, see Topic C: Calculation of the 2021 Child Tax Credit. 

You are required to enter the amount you received as shown on that letter.   But if your income falls within the parameters of the payment protection, you will be okay and will not have to pay any of it back, even though you are not claiming the child on your 2021 tax return.

And....that will also be true for the stimulus payment.   If you received the $1400 for claiming the child and are not claiming that child on your 2021 return, you do not have to pay it back.   The fact that you also gave that money to the mother will not affect you.   Although.....if the child was in your care, you could have rightfully kept that money yourself for a foster child who could be claimed as your dependent.  Giving it to the mother was kind and generous of you, but was not required.

You did not ask about this----but just in case.....when you filed your 2020 tax return did you know that you could file a joint return even though your spouse had died in 2020?   If you did not file a joint 2020 return, you may need to amend and file joint.   The advantage of filing that way is that you would have a higher standard deduction for the 2020 tax year, and less of your 2020 income would be taxable.

And....you say you had the foster child for 16 months.....but which months?   Did the child actually live with you for more than six months of 2021?   Or not?   If the child was with you for more than half of 2021 you could claim the child on your own 2021 return.  Let's look at that.  

When you prepare your return, you will go here to enter the advance child tax credit payments that were sent to you:

Federal>Deductions and Credits>You and Your Family>Child Tax Credit

Post back with some information on how this comes out for you and whether the repayment protection has helped you.  And with when the child lived with you.

[Opus 17]

I'm sorry for your loss.

The Advance Child Tax Credit and the Stimulus Payment are two separate things, they do not affect each other.

Whatever stimulus payment you got is your money to do with whatever you want.  If you received a stimulus for a dependent and you don't claim that dependent on your tax return, you don't have to repay it.  

If you got the Advance Child Tax Credit for a dependent, and you don't claim that dependent on your tax return, you do have to repay the credit unless you qualify for low income repayment protection.  Turbotax will calculate this for you.  I'm sorry you couldn't stop the checks, but if you knew you would not be entitled to the money, you should have saved it so you would have it now when you need it.

In turbotax, click on the Deductions and Credits page, and then select "Advance Payments, Child and other dependent tax credits" even if you don't have a dependent.  If you don't see the choice at first, you may have to click on "show me more options" or "let me choose what to work on."

Then click "continue" and you will see a screen where you can enter the advance credit you received.  Be aware that your IRS letter 6419 that is a reminder of the credit you received, might be split between you and your spouse.  In other words, the IRS might list $750 on each of your accounts instead of $1500 on one account.   Make sure you enter the entire amount of ACTC you received even if it was split.

Turbotax will calculate the amount you have to repay; it will be subtracted from your other refund or added to other taxes you may owe.