Now, big questions like calculating your payments and unsubscribing from payments can be answered in one place. And that’s a good thing given that government money given to families to help during the pandemic could cause potential tax refunds to change, depending on how much money you’ve earned.
As advance payments were estimates based on what families did in 2020, people should be wary that there could be a gap.
Families could have obtained six monthly advance payments totaling $ 1,800 for children 5 and under and up to $ 1,500 for ages 6 to 17.
Extended credit payments start to gradually eliminate at $ 75,000 for individuals, $ 112,500 for heads of families and $ 150,000 for married couples.
Since the IRS calculated the payments based on the 2020 information, households that saw their incomes increase in 2021 may have to repay some of that money to the government if the wage increase pushes them past. ‘a phase-out threshold.
Another possible situation that could lead to overpayment would be a divorce in 2021 which leads to an individual tax return. Anyone in this situation should make sure that their individual tax return does not push them beyond the phase-out threshold.
So, will you have to give money back if your advanced child tax credit money turns out to be more than what you qualify for? May be. You can qualify for full refund protection if your primary residence was in the United States for more than half of 2021 and your modified adjusted gross income for the same year was equal to or less than the following:
- $ 60,000 if you are married and file a joint return or if you qualify as an eligible widow or widower;
- $ 50,000 if you are making a declaration as the head of the family; and
- $ 40,000 if you are a single tax filer or if you are married and filing a separate return.
The IRS is phasing out reimbursement protection above these income levels, with $ 0 protection equal to or greater than these modified AGI amounts:
- $ 120,000 if you are married and file a joint return or if you are filing as an eligible widow or widower;
- $ 100,000 if you are making a declaration as the head of the family; Where
- $ 80,000 if you are a single taxfiler or if you are married and filing a separate return.
For taxpayers who must repay excess child tax credit funds, the money will be deducted first of any expected federal refund check. People who owe more than their refund check are encouraged to check the IRS website for your full payment options.
Not sure how much of the Advanced Child Tax Credit money you received in 2021? In January, the IRS will send Letter 6419 which will specify the total amount paid to you for reference when filing your return.
Taxpayers should also be on the lookout for separate letters from the IRS coming this month discussing not only the child tax credit payment, but also all dunning checks. When these arrive, don’t throw them away, they should break down how much money you were given.
As the IRS would still be behind on some tax returns as of 2020 (around 6.3 million were still not processed by December 18), it is imperative to complete the forms as correctly as possible to receive refunds as soon as possible.
Find all the new FAQs on the child tax credit here.
Learn more about filing your income tax returns, which are due April 18, here.
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