SAN ANTONIO – Did you receive a child tax credit payment from the Internal Revenue Service?
Millions of qualifying families were sent monthly payments from July through December 2021 thanks to the American Rescue Plan Act.
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But now that it’s tax time, there are some things you need to know if you received these payments.
Firstly, the IRS is expected to send families who received the payments something called Letter 6419, which shows the total amount of money a family received as part of the Child Tax Credit.
Some families might end up owing money back to the IRS if they were overpaid.
The IRS determined eligibility for the Child Tax Credit payments based on information from eligible taxpayers’ 2020 tax returns, and in some cases, 2019 tax returns were used if 2020 tax returns were not available.
Eligible families whose income was higher in 2021 than in previous years might have to pay some of the money back if their income puts them past the threshold for the tax credit since the IRS used estimated numbers to determine if a family qualified for the payments.
“Family and life situations can be fluid throughout a given year,” the IRS website states.
According to the IRS, tax credit payments were reduced for families with incomes over $150,000 for married taxpayers filing a joint return, $112,500 for heads of household, and $75,000 for all other taxpayers.
So if your 2020 income qualified you for the full tax credit payment, but your 2021 income was higher, it could have phased you out of receiving the full benefit.
Families claiming the child tax credit for the 2021 tax year will receive up to $3,000 for each qualifying child ages 6-17 and $3,600 for children under age 6. The child tax credit payments sent in 2021 were an advance of half of the amount of that credit.
This means, for example, that families could have received up to $300 a month from July to December for each qualifying child under age 6, for a total of $1,800. The other $1,800 will be included in a family’s 2021 tax credits.
In order to determine if you need to repay any of the credit, you need to compare the amount from advance payments you received in 2021 with the amount you’re allowed to claim based on your actual income.
However, if the amount of the child tax credit you are due exceeds the total amount of your advance payments, you can claim the remaining amount of your credit on your 2021 tax return, according to the IRS.
So, if you are still below the income threshold to receive the payments, the remainder will be credited to you when filing for the 2022 tax season.