Since July, millions of families have been receiving advance monthly payments of the Child Tax Credit. The payments are worth up to $300 per child, depending on their age. Some families have been using the extra cash to help with childcare, buy groceries, pay rent or catch up on bills. While many people have welcomed the financial boost, others are wondering, “What’s the catch?”. Keep reading to see how the Child Tax Credit payments will affect your taxes in 2022.
What are the advance Child Tax Credit payments?
The Child Tax Credit is worth $3,600 for children ages 5 and under and $3,000 for children ages 6 through 17 at the end of 2021. The advance payments are 50% of the credit you’re expected to qualify for when you file your 2021 tax return. There’s no catch. It isn’t considered taxable income and it won’t affect any government benefits you receive. You’re simply getting half of the credit now and the rest when you do your taxes.
The payments are based on your 2020 or 2019 tax return, whichever was filed most recently. To qualify for the full credit, your modified adjusted gross income must be under $75,000 for single filers, $112,500 for head of household and $150,000 for married filing jointly. Most eligible taxpayers automatically began receiving the monthly payments in the summer.
What happens if your payment was inaccurate?
If the payment you received was smaller than the amount you were entitled to, you can claim the remaining portion when you file your 2021 tax return. Use ezTaxReturn to ensure you get every legal credit and deduction you deserve, so you get the biggest possible refund.
On the other hand, if the amount you received is more than you deserved, expect to repay some or all of the excess when you do your taxes. There are numerous reasons why you may have mistakenly received a check you were ineligible for. For starters, the payments were based on your 2020 tax return, and as we all know, a lot can change in a year. It’s possible that since filing your return one of the following has happened:
- Your child no longer meets the age requirements
- You earned more money this year
- Your custody agreement requires you to alternate years
- Your filing status changed
- You lived outside of the U.S. for more than six months in 2021
As a result, you may owe money when you file your taxes.
Will I get a letter from the IRS about the Child Tax Credit?
In January 2022, the IRS will be sending Letter 6419 to recipients of the Child Tax Credit. It will state the total amount of the advance payments you received in 2021. Keep this for your records because you’ll need it when you file your return. ezTaxReturn is the fastest and easiest way to do your taxes. Most people can prepare and e-file in just 30 minutes.
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