Will The Child Tax Credit Affect Your 2022 Taxes?
The advance portion of the child tax credit is already in its third month of distribution, with the latest check being deposited into the bank accounts of millions of Americans on Sept. 15. Eligible families who met the income thresholds received $300 for each eligible dependent child under the age of 6.
See: Child Tax Credit Payments Will Be Deposited Sept. 15 – Here Are the Other Important Dates
Find: Didn’t Get Your Child Tax Credit? Here’s How to Track It Down
These payments began in July and will last through December, amounting to half, $1,800, of the full $3,600 amount. The other half will be eligible to be claimed next year during tax time.
This is what has caused concern for many people. Currently, the income thresholds for the full amount of benefit are $75,000 and under filing single and $150,000 filing jointly. The IRS bases your monthly payments on your 2019 or 2020 tax return. This means if there is a significant change come next year it is possible that you might have to pay a portion or all of the credit back.
These changes can include things like an increase in income for you or your spouse that brings out over the threshold or a change/decrease in the number or age of dependents. If you used the non-filer tool to register for the child tax credit, you likely will not need to worry about this as you also likely did not file taxes and have registered for the credit with your information as of 2021 anyway.
See: Spanish-Speaking Parents Can Now Sign Up for Child Tax Credit Using Two New Tools
Find: How the Child Tax Credit and Other Stimulus Packages Benefit the Full Economy and Not Just Recipients
There are two ways to avoid this. One is to make sure your information is up to date with the IRS to avoid any overpayments towards you on their part. The IRS set up a child tax credit update portal online so that you can update your household details in order to avoid any mixup with the IRS. Another way to avoid having to pay back the credit is to simply opt-out of payments if you believe you might be on the cusp of exceeding an income or age threshold. The portal to accomplish both can be found here.
It’s important to remember that the child tax credit is fully refundable, meaning that you will not be required to pay it back nor is it necessary to file taxes in order to receive it – IF – you meet the eligibility criteria. The IRS has stated in the past that over 90% of American families with children will be eligible to receive the credit, meaning the majority of people do not need to worry. That said, it’s important to remember that you should not exceed these criteria for eligibility in order to be safe from repayment next year.
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Last updated: September 15, 2021
This article originally appeared on GOBankingRates.com: Will The Child Tax Credit Affect Your 2022 Taxes?
