Are you aware when you’re eligible forthis 12 months? It is a good likelihood you’re: As many as 92% of households with youngsters will , which can be despatched out July 15. However when you , will that make tax time extra expensive subsequent 12 months once you file your federal revenue tax return?
When you qualify, you will routinely obtain the primary half of your advance funds in month-to-month installments starting in July and ending in December. The rest of your cash will come once you file your taxes in 2022. However it’s not fairly that easy, since you’ll have to do some math once you file to see when you obtained an excessive amount of or too little.
We’ll clarify what it is advisable learn about how the kid tax credit score funds could have an effect on your taxes in 2022 and what you will have to do once you file subsequent tax season. For extra, here is what to do when you aren’t usually, 3 ways to know when you for the kid tax credit score and how you can rapidly you may get in all, now that the .
Will I have to pay taxes next year on my child tax credit checks?
The short answer is no, but there are some financial details you still need to know. Child tax credit checks don’t count as income, so you won’t have to pay income taxes on the payments, Mark Jaeger, vice president of tax operations at, told CNET.
The IRS refers to these checks as “advance” payments ahead of 2021 tax season. “That means you’re simply getting the payments sooner rather than waiting to receive that money when you file,” Jaeger said.
While you won’t pay taxes in 2022 on the payments you receive this year, that doesn’t mean you won’t need to repay the IRS some part of the “advance” payment when you file your income tax return in 2022. Read on for what you’ll need to do next year when you file.
Will I have to report my 2021 payments on my 2022 tax return?
Yes. Next year in January, the IRS intends to send families that received child tax credit payments a letter with the total amount of money they got in 2021. Hold on to this notice — which the IRS is calling Letter 6419 — you’ll need information from it when you file your 2021 tax return during next year’s tax season. (This is not the samethis year about the payments.)
To make sure the IRS has your most recent mailing address, you’ll be able to update it through thelater this year, the IRS said. You can also .
Do I have to pay back any child tax credit money I receive?
Maybe. Unless you, you’ll get half of your estimated amount this year from the IRS. Foregoing the monthly payments means you’d get your share in one big check instead of seven smaller ones — six in 2021 and one in 2022.
No matter how you get your money, if for whatever reason you wind up getting paid more than you actually qualify for, you may need to repay some of the money. You’ll use information from the letter the IRS sends next January to calculate the difference when you file your tax return in 2022.
However, the IRS will use what it calls “repayment protection” so that lower-income families won’t be on the hook to repay money.
Income caps for repaying child tax credit payments
|Filing status||Qualify for full repayment protection||Repayment protection phases out|
|Single filer||Up to $40,000||Over $80,000|
|Filing as head of household||Up to $50,000||Over $100,000|
|Married filing a joint return||Up to $60,000||Over $120,000|
Most people won’t need to repay the IRS, Alison Flores, principal researcher from The Tax Institute at, told CNET. “There is a repayment safety net for some people,” Flores said, “a protection for lower income taxpayers that will shield a majority of people who claim the child tax credit.”
If your, or AGI, for 2021 is at or below a set income level, you likely won’t owe the IRS anything, even if you received more child tax credit money than you technically should have. Above this income level, the amount you need to repay increases, or phases in, until you owe a full repayment above a set cap.
The letter the IRS sends you in January will help you determine if you received an overpayment and if you need to repay all or part of the advance payments.
The IRS will estimate your payments using the most recent information it has on hand for you, using either your 2019 or 2020 tax return. To reduce the chance you receive an overpayment this year, update the IRS with your current family status usinglater this year and continue to keep the IRS up to date with family changes through the end of 2021.
Could I get more child tax credit money in 2022 when I file my tax return?
Yes. After you compare the information on the letter the IRS sends you in January 2022 with what you are eligible for, you may discover you are due more than you received in advance payments, based on your actual 2021 income. If that is the case, you can claim the remaining amount of your child tax credit when you file your return.
What if I opt out of the advance payments?
Now that theare open, you’ll be able to and instead claim your child tax credit when you file in 2022.
Will the child tax credit affect other federal benefits I receive?
According to the IRS, no. Because the advance child tax credit payments don’t count as income, federal, state or local agencies can’t use the amount when determining if you or your family is eligible for other benefits or assistance.
For more financial benefits this year, here’s how to save money onand .
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