Overpayments of the advanced child tax credit should be forgiven under a certain MAGI. Turbotax is making me pay back the overpayment instead. How do i overide this?

[rustygp]

Has the IRS given additional guidance on this issue yet? If not, when can i expect an update on this issue, and can i amend my return later to affect this change if i choose to file before that time?

[DoninGA]

The repayment of an overpayment of the advanced child tax credit is covered in this IRS website - https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-t...

[RobertB4444]

The IRS says it will forgive repayment of excess advance child tax credit if your MAGI is below 

• $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.

and your home in in the United States for more than half of 2021.

[rustygp]

Thank you for confirming that for me. Line 14f of schedule 8812 is my bottleneck. It caused 2020 tax year based advanced payments to be made whereas line 14e is in accordance with 2021 tax year. I have referenced my circumstances with the relevant irs question and it appears that turbotax isn't taking repayment protection into account. 

Q H6. If I qualify for repayment protection, how much repayment relief will I qualify for? (added Ju...

A6. If you qualify for repayment protection, the amount of your tax liability from excess advance Child Tax Credit payments is reduced by up to the full repayment protection amount. The full repayment protection amount equals $2,000, multiplied by the following:

• The number of qualifying children that the IRS took into account in determining the IRS’s initial estimate of your advance Child Tax Credit payments, minus (3)
• The number of qualifying children properly taken into account in determining the allowed Child Tax Credit amount on your 2021 tax return. (2)

3-2=1 x $2000= $2000  in repayment protection. Is this a refundable credit? What form would i need to submit to secure this amount? 

[DianeW777]

This is not a refundable credit, however if you qualify, and you were overpaid due to the advanced child tax credit (ACTC) issued from July - December, based on your 2020 return you may be eligible for Repayment Protection.  Based on the IRS guidelines the following income levels could eliminate repayment that you received but were not entitled to.

TurboTax does the calculation automatically based on your entries and it is calculated on Form 8812, then carried to Form 1040, line 19.

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

Example: Income is $30,000 in 2021, the taxpayer received $1,800 of ACTC for one child claimed on the 2020 return. The taxpayer no longer qualifies for the child tax credit because the other parent is claiming the child in 2021. The $1,800 would need to be repaid unless the taxpayer qualified for the Repayment Protection.

• When all the questions are answered under Deductions & Credits > Advanced Payments, Child and Other Dependent Care Credits; OR
• TurboTax CD/Download under Deductions & Credits > I'll choose what I work on >  Child and Other Dependent Tax Credit, under You & Your Family

Answer the questions asked and you should see the images below if you qualify for the Repayment Protection in full.  In this case the Form 1040, line 19 is zero.

[rustygp]

somewhere on form 1040 or schedule 8812 the payment protection should be reflected to illustrate this event taking place. line 19 is for nonrefundable dependent credit such as supporting a person over 18 which is $500 in my case.  This is then subtracted from the tax owed to formulate my total tax. I would think that repayment protection should be classified as a nonrefundable credit since it can directly affect both my nonrefundable and refundable credit but that is probably wishful thinking blended with my limited knowledge on the IRS definitions of what classifies as refundable and nonrefundable--- and where this is protection and never clearly stated as a credit of any type it escapes  either "fundable"  classification even though it can ironically affect both. ( a one way valve)  

I do qualify for repayment protection based on the qualifiers given, however the credit is being shifted from one  previously qualifying child to another currently qualifying child and the aggregate qualifying children count has decreased by 1 child. Therefore, the IRS is saying on schedule 8812 that they are using line 5 to filter out context and basically saying  " well, this credit is now for the qualifying kid, not the unqualified kid so now we dont have to credit you for the qualified kid on your return moving forward." resembles a bait and switch in my opinion and should be exactly what payment protection is established for.

At any rate my question is still open but if i had to close this ticket today, i think the image you pasted provides a close explanation to my situation (paragraph 3 "You may have received etc"). It is saying that the IRS thinks all of my child tax credit has already been paid monetarily without regarding the context and is taking from my credit instead of my tax owed so they can get away with it without granting me payment protection?

[KrisD15]

If I understand you correctly, you are saying that the advance payments were based on a different child. 

No, that is not correct. 

The "Advance Payments" were meant to be just that. Paying you ahead of time what you would get on your 2021 Tax Year Return as a Child Tax Credit. 

The IRS based it on information from your 2020 Tax Year return because 2021 wasn't over yet.

If you received payments based on having 1 dependent, it was based on the idea that you would be claiming one dependent on your 2021 return.  

The payments were made to help support a dependent, so whichever dependent that was in 2021, is now the same one you are claiming on your 2021 tax return.

It is true that a Taxpayer that did receive advance payments but no longer has a dependent might have that over-payment forgiven but that is not your situation. 

[rustygp]

my situation is as follows:  Head of household under 50k in AGI. i claim 3 children every even year based on my parnter's divorce decree with her previous husband. i claim her as a dependent because she has no income. I claim the 2 younger biological children every year and the oldest stepson on even years regardless of the fact that i support him 12 months a year and he hasnt seen or even spoken to the other parent in 2 years. so the breakdown of advanced payment numbers is as follows:     child 1 $3600/2=1800/6=300 . child 2 3000/2=1500/6=250. child 3(stepson) same as child 2.  (300+250+250) * 6months = $4800.

Line 5 of schedule 8812 says : how many are you claiming--2-okay then you get $6600. (the rates here should be aligned with 2020 numbers instead of going by 2021 rates since 2020 is what the irs had to go off of)

Line 14f says: how much have you received already? $4800 aka your advanced tax payment(Based on 2020 when i claimed 3 instead of 2)

So we have $6600 (2021 rate) - $4800 (2020 rate) and so arises the over payment discrepancy which isn't forgivable for some reason?

----It is true that a Taxpayer that did receive advance payments but no longer has a dependent might have that over-payment forgiven but that is not your situation.----  why would this be forgiven when my situation is not? Im still supporting the kid and have been the entire time while his other parent ignores him and still claims him every other year but that isnt forgivable ? What's more, I have plugged in the numbers as if i didnt receive advanced payments for the child in question to simulate this and still received no payment protection;or if i did acquire protection i cant see any visual proof that this occured.

I just need clear language on what is deemed forgivable and i also need what line on schedule 8812 or on the 1040 where this $2000 protection occurs even if it doesn't apply to my situation just so I can satisfy my curiosity. If i had more time i would simulate this event for myself, but again the 3 kids keep me pretty busy when im not working

[rustygp]

"It is true that a Taxpayer that did receive advance payments but no longer has a dependent might have that over-payment forgiven but that is not your situation. " that is indeed my situation unless the other parent decides not to claim him this year; in which case i would not need to worry about the forgiveness aka overpayment protection.

im head of household agi under 50k.

claimed 3 dependents in 2020 ---- 6(250+250+300)= 4800

claiming 2 dependents in 2021---schedule 8812 ==6600 

also schedule 8812: 6600-4800= refundable credit

###No repayment protection## This is my question

If the other parent lets me claim the 3rd dependent:

claiming 3dependents in 2021---schedule 8812 ==9600

9600-4800= refundable credit

What you're saying is because there is an option to switch which child the advanced credit money is allocated to, i dont deserve forgiveness. If i only had 1 child whom i only claimed on odd years, then i would be forgiven had i received money. Do You Not See the Hypocrisy embedded in these situations?

[DianeW777]

I understand the logic you are using however that is not the intent or how it is required to be handled. The advance child tax credit (ACTC) is based on the tax year 2020, if your situation changes because you are claiming less dependents, the overall credit you are entitled to is based on the dependent children on your 2021 return.  You are allowed a maximum amount of credit, less what you already received.  

As you indicated, you have two dependents that are under 6 years of age which allows you $3,600 each or a total of $7,200.  This will be reduced by any ACTC you received and the difference is what you are entitled to.  There is no underpayment for 2021 or a Repayment Protection action for your situation.

The other parent or person will be entitled to the child tax credit (CTC) for the child they now claim and you do not.

[KrisD15 · Accepted solution]

Yes, it may seem unfair, but what I think you are not understanding is that this is ALL about the Child Tax Credit for Tax Year 2021. 

The credit is figured first FOR Tax Year 2021, then the advance payments you received are subtracted. The result is what you get. 

For SOME Taxpayers, the result is that they get no credit AND they have to pay the advance credits back. 

For these Taxpayers, and only these Taxpayers does the "Re-payment Protection" possibly apply. 

This is how the tax law was written. TurboTax only follows the law. 

According to the IRS:

"The amount of advance Child Tax Credit payments that you received during 2021 is based on the IRS’s estimate of the Child Tax Credit amount that you properly would be allowed for the 2021 tax year. The law requires this estimate to be based on these primary sources of information:

1. Your 2020 tax year return or, if that return is not available, your 2019 tax year return (including a 2019 tax return filed through the Non-Filer Tool for Economic Impact Payments on IRS.gov, or a 2020 tax return filed through the Child Tax Credit Non-filer Sign-up Tool); and
2. Any updated information you provided to the IRS in 2021, including information provided through the Child Tax Credit Update Portal (CTC UP).

Family and life situations can be fluid throughout a given year. Here are examples of changes that could have resulted in excess advance Child Tax Credit payments.

• A qualifying child who resided with you may have changed homes during 2021 and resided more than half of the 2021 tax year with a different individual.
• Your income increased in 2021.
• Your filing status changed for 2021.
• Your main home was outside of the United States for more than half of 2021.

As a result of these types of  family and life changes, you may have received a total amount of advance Child Tax Credit payments that exceeds the amount of Child Tax Credit that you  are allowed on your 2021 tax return."

IRS LINK on Child Tax Credit

[Opus 17]

There is only one child credit, it is calculated on your 2021 tax return based on your 2021 income and dependents you claim in 2021.  

The IRS was directed to make advance payments if possible, and to use whatever information was available to them, such as past tax returns.  But neither the advance payments, nor the credit itself, is tied to specific individuals.  It's all just dollars.  

If you qualify for a $6000 credit, and you received $4800 in advance payments, you should get another $1200 added to your refund.  You don't get to say that part of the $4800 was for a child you aren't claiming so that should be covered by repayment protection, it doesn't work that way and was never meant to.   If based on your tax return you are entitled to 6000 dollars and you got 4800 dollar already, you get 1200 more dollars.  It's just money, it has no ties to specific dependent. 

[rustygp]

Only if you owe, they will let it go. If you don't owe, then it's on with the show. Thanks 

[Akahipua]

If grandma revieved the advanced payments for grandchild  but mother is claiming him 2022 and grandma made less than 50000 for 2021. Will she have to repay the $1500. The mother never filled 2020 cause she didn't work and didn't have child. 

[MarilynG1]

Grandma may qualify for Full Repayment Projection and not be required to repay the Advance Child Tax Credit amount she received (depending on her Filing Status).

From the IRS:

"You qualify for full repayment protection and won’t need to repay any excess amount of your advance Child Tax Credit payments 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."

Click this link for more info on Repayment Protection.