MONTHLY ADVANCE CHILD TAX CREDIT PAYMENTS
CAUTION: FOR SOME THIS COULD CAUSE YOU TO OWE MONEY ON YOUR 2021 RETURN
Many taxpayers are receiving letters from the IRS (called L6416) which tells them they will be receiving advanced monthly payments for the new child tax credit.
The plan is to deliver half of the credit in the form of monthly payments from July to December.
The rest of the credit will be received when filing the 2021 return.
BUT, YOU MAY OWE SOME OR ALL OF THIS MONEY BACK WHEN YOU FILE YOUR 2021 RETURN IF:
- Your income is too high (see the qualifications below)
- You claim your dependents every other year (the IRS uses your 2020 return to determine the monthly payments)
- Your child turns 7 years or 17 years (see amounts below)
- Your dependent no longer lives with you
Qualifications for the Credit
- Credit is $3,000 per child for ages 6 yrs to 17 yrs.
- Credit is $3,600 per child under the age of 6 yrs.
- Credit phases out when income is over $75,000 Single, $112,500 Head of household, $150,00 Joint
- $50 is taken away for every $1,000 over those limits.
If you are concerned about getting too much now and owing later, the IRS gives you the option to unenroll here: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021