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Counting Cash, Financial Planning

Will I Have to Pay Back the Child Tax Credit?

Important changes to the Child Tax Credit will help many families get advance payments of the Child Tax Credit. Half the total credit amount will be paid in advance monthly payments and you will claim the other half when you file your 2021 income tax return. The first advance payment was made on July 15, 2021.

Our general advice is if you don’t need it to meet household bills, do not take it because you may need to pay it back if you no longer qualify by the end of 2021. It’s not like the stimulus checks that don’t need to be paid back.

If you’re eligible for the full amount of child tax credit money, you won’t have to pay it back. However, if you don’t qualify for the full amount because of a change in your income or number of dependents but receive the full amount anyway, you may need to pay that extra money back.

From the IRS website:

Important changes to the Child Tax Credit will help many families get advance payments of the credit starting this summer. The IRS will pay half the total credit amount in advance monthly payments beginning July 15. You will claim the other half when you file your 2021 income tax return. These changes apply to tax year 2021 only.

To qualify for advance Child Tax Credit payments, you — and your spouse, if you filed a joint return — must have:

  • Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return; or
  • Given us your information in 2020 to receive the Economic Impact Payment using the Non-Filers: Enter Payment Info Here tool; and
  • A main home in the United States for more than half the year (the 50 states and the District of Columbia) or file a joint return with a spouse who has a main home in the United States for more than half the year; and
  • A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number; and
  • Made less than certain income limits.

We’ll use information you provided earlier to determine if you qualify and automatically enroll you for advance payments. You do not need to take any additional action to get advance payments.

Make Changes to Your Advance Payment Enrollment

Please visit the IRS website to make changes to how you receive your child tax credit payments:

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

  • Check if you’re enrolled to receive advance payments
  • Unenroll to stop getting advance payments
  • Provide or update your bank account information for monthly payments starting with the August payment

Check if You Are Eligible for the Child Tax Credit

Check if you might be eligible for advance payments of the Child Tax Credit:

https://www.irs.gov/credits-deductions/advance-child-tax-credit-eligibility-assistant

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WE’RE HERE TO HELP

If you still have questions about the child tax credit you received, please call or email us at (410) 823-5442 or [email protected]

Chesapeake Financial Advisors is a fee-only financial planning, investment advisory and tax planning firm with offices in Towson, Columbia, and Frederick, Maryland.

For disclaimer, please follow our link below:

https://www.peakeadvisors.com/site/wp-content/uploads/2019/05/Compliance-Social-Media-Disclaimer.pdf 

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