Question

Child Tax Credit

Forum|Forum|4 years ago
July 21, 2021
1 reply
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I have received my first child tax credit payment. Last year I was not working, however, this year I am working and my income will be much higher than last years. Should I opt out of receiving the child tax credit? Will I need to pay back some of the money given to me if I do not opt out? I am trying to figure out if it will be better for me to collect the tax credit now or wait until I file my 2021 taxes. Thank you!

Loretta P

Claiming the Child tax credit could be an issue because the advance credits will be based on 2020 tax returns, or the most recent year the IRS has on file, but the credit will be reconciled on the 2021 return. If you received more in Advanced CTC payments because of the lower 2020 income you may be required to pay that back when filing the 2021 return.

There is some other reasons you may not have to pay it back because of a safe harbor, which depends on income: Individuals making less than $40,000 ($60,000 for couples filing jointly) who receive an overpayment of the credit will not need to repay it.

Parents can opt out of the payments using the IRS’s online portal.

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

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