Search

Do you have to pay back the child tax credit payment? What to know about your 2022 taxes - CNET

sinayamars.blogspot.com
$300 in $100 bills

If your income goes up this year, you might be eligible for less of the child tax credit than originally estimated. 

Sarah Tew/CNET

The IRS is now sending the first batch of monthly payments of the child tax credit, with $15 billion going out this week to eligible families. The IRS bases your monthly payment amount on your household's 2019 or 2020 tax return. But what if you received more than you qualified for in your first payment. Do you need to pay back the child tax credit payment? Maybe. We'll explain.

The IRS used your recent tax return to set your payment. But there's plenty that could change between tax seasons -- for instance, you got a pay increase or one of your dependents is no longer eligible -- that could result in your receiving more money than you should have. One way to prevent that from happening is to take steps this year to update your household details using an IRS portal

With so many moving parts with the 2021 child tax credit, it can get confusing fast, but the IRS has resources to help you check your eligibility, opt out of the monthly checks and more. We'll explain how to estimate how much money you'll get, how you can prepare now to avoid having to pay the IRS later, and what non-tax-filing parents should know about the credit so they can register for payments. You can also see if your family qualifies. This story was recently updated. 

Now playing: Watch this: Child tax credit: Everything we know

4:17

Will I owe taxes in 2022 on my 2021 child tax credit money?

The short answer is no, but you still need to know some financial details. 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 TaxAct, 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, you still may need to repay the IRS some part of the "advance" payment when you file your income tax return in 2022. 

Will I have to pay the IRS back for my child tax credit money?

Maybe. Unless you unenroll from, or opt out of, the monthly child tax credit payments, you'll automatically get half of your estimated amount this year from the IRS. Forgoing the monthly payments means that instead of receiving seven smaller installments -- six in 2021 and one in 2022 -- you will simply collect one large payment when you file your tax return in 2022.

If for whatever reason you wind up getting more child tax credit money than you actually qualify for, you might need to repay some of the money to the IRS next year. That could be the case in the following scenarios:

  • If someone in your household ends up getting a better paying job this year, increasing your adjusted gross income and pushing you above or out of a previous income bracket. 
  • If one of your dependents ages out of an age bracket sometime this year. For example, if your 5-year-old turns 6 in 2021, that would qualify you for a smaller payment. Or if your 17-year-old turns 18 in 2021, you would no longer be eligible for the monthly payments. 
  • If there is a change in custody. Two examples: if parents divorce and have a shared custody arrangement, or if the parent with custody changes from one year to the next. In a joint custody situation, only one parent can claim the credit for a given child. 

Those kinds of changes in circumstances are one major reason why the IRS is giving folks the chance to opt out of the advance payments. 

To reduce the chance you receive an overpayment this year, later this summer you'll be able to update the IRS with your current family status using the child tax credit portal. (The update categories for marital status, dependents and income aren't yet available, but they will be later.) You should continue to keep the IRS up to date with family changes through the end of 2021.

Know that if the household's adjusted gross income, or AGI, for 2021 is 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. This is what the IRS calls "repayment protection" so that lower-income families won't be on the hook to repay money. Above a certain income level, the amount you need to repay increases, or phases in, until you owe a full repayment.

A letter the IRS will send you in January 2022 will help you determine if you received an overpayment and if you need to repay all or part of the advance payments. See below for more on that letter.

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

Will I need to report payments when I file taxes in 2022?

Yes. In January 2022, the IRS will 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 same letter that the IRS is sending this year about the payments.)

To make sure the IRS has your most recent mailing address, you'll be able to update it through the Child Tax Credit Update Portal in coming months, the IRS said. You can also change your address through the Postal Service.

cash-money-stimulus-child-tax-credit-2021-piggy-bank-savings-july-15-payment-calendar-30

Child tax credit payments start July 15 for 92% of U.S. families with children. 

Sarah Tew/CNET

Could I qualify for more child tax credit money in 2022 after filing taxes?

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.

Will my child tax credit money 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 on child care costs and health care expenses.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Adblock test (Why?)



"pay" - Google News
July 16, 2021 at 10:30PM
https://ift.tt/3wI1RNf

Do you have to pay back the child tax credit payment? What to know about your 2022 taxes - CNET
"pay" - Google News
https://ift.tt/301s6zB


Bagikan Berita Ini

0 Response to "Do you have to pay back the child tax credit payment? What to know about your 2022 taxes - CNET"

Post a Comment

Powered by Blogger.