If you had a baby this year (2021), you will probably not get the advance Child Tax Credit automatically, because you would not have claimed the baby in a prior year. However, the IRS is setting up a portal on their website where you can apply and get all applicable tax credits. If the baby is born on or before December 31, 2021, then the baby will qualify for the credit.
I Know I Will Qualify For A Child Tax Credit For 2021, But I Don’t Want To Receive Advance Payments. Is There A Way To Opt Out Of Advance Payments Of The Child Tax Credit?
Yes, you may opt out on advance payments of the Child Tax Credit, but you have to inform the IRS that you would like to opt out. As it currently stands, anyone who qualifies for the credit will automatically receive the monthly advance payments unless they opt out. The IRS is currently setting up a portal on their website where you will be able to go online and opt out of the advance payment program.
Will Monthly Payments Of The Advanced Child Tax Credit Be Reduced For Taxpayers Who Owe Back Taxes Or Child Support?
It is not yet clear whether advance payments of the Child Tax Credit will be reduced by back taxes or child support arrearage. This is because no final decision has been made on the matter as of July 2021. However, if I had to guess, I would say that since this is a tax credit that can be reduced in similar ways that a tax refund is reduced, it may eventually be reduced by back taxes or child support arrears.
Do I Have To Pay Any Taxes On The Advanced Child Tax Credits I May Get?
No, you do not have to pay any taxes on advancements of the Child Tax Credit. If you wait until 2022 and claim your entire credit on that return, it is clear to see that it is a credit and not taxable. The same applies if you receive your advanced credits during 2021.
How Do I Reconcile The Advanced Payments I Receive With The Actual Credit That I’m Entitled To?
The credit you’re entitled to will be divided into two parts. Half of the credit will be sent to you during the last half of 2021. The remaining 50% can be claimed on your tax return in 2022.
Do Overpayments Of The Child Tax Credit For 2021 Need To Be Paid Back?
Unfortunately, overpayments of the Child Tax Credit do need to be paid back. If circumstances change and you have been getting too much of the Child Tax Credit, then on your return for 2021, the remaining credit will be adjusted downward. You could even have to repay what you’ve already received if you received credit you were not entitled to.
For more information on Child Tax Credit Laws In South Carolina, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 271-7940 today.