(ABC4) – If you share custody of your child or children, it may impact your advance child tax credit payments.
The fourth batch of monthly checks is scheduled to go out in the coming days, according to the IRS. These child tax credit payments will continue to be distributed monthly to eligible taxpayers through the rest of the year. The last half of payments will go out in one payment in 2022.
According to the IRS, more than 30 million households qualify for payments of up to $300 per month for eligible children ages 5 and younger and $250 for each eligible child between 6 and 17 years old. Including the last half of the tax credit, recipients could get a total of up to $3,600 per child 5 years old and younger, and $3,000 for every child between 6 to 17 years old.
But what if you share custody? The IRS has laid out a few examples of how this could impact your advanced child tax credit payments.
If two parents share custody
The IRS says who receives the 2021 advance child tax credit payments is based on the information on the taxpayer’s 2020 tax return (or their 2019 return if the 2020 return hasn’t been processed). Whichever parent claimed the child tax credit on their 2020 (or 2019) tax return will receive the 2021 advance child tax credit payments.
If a parent receives the child tax credit payment but shouldn’t have
According to the IRS, parents who will not be eligible to claim the child tax credit when they file their 2021 tax return should go to IRS.gov and unenroll to stop receiving the monthly payments. By receiving monthly payments now, you could have to return those payments when you file your tax return next year.
If the custody situation changes and you are entitled to the child tax credit in 2021, you can claim the full amount when you file your tax return next year.
If parents alternate years claiming their child on their tax return
In this case, the IRS will send the 2021 advance child tax credit payments to the parent who claimed the child on their 2020 tax return, even though they will not claim them on their 2021 tax return.
The IRS explains this is because the taxpayer claimed their child on the 2020 tax return – the IRS will automatically issue the advance payments to them. When this parent files their 2021 tax return, they may have to pay back the payments over the amount of the credit they are entitled to claim.
According to the IRS, some taxpayers may be excused from repaying some or all of the excess amount if they qualify for repayment protection. If a taxpayer won’t be claiming the child tax credit on their 2021 return, they should unenroll from receiving the monthly payments.
If one parent is receiving the child tax credit payments even though the other parent will claim the child in 2021
Here, the IRS says taxpayers claiming the qualifying child will still be able to claim the full credit amount on their 2021 tax return, even if the other parent is receiving the advance child tax credit payments.
The parent receiving the payments should unenroll but their decision will not affect the other parent’s ability to claim the child tax credit, according to the IRS.
For more information about the child tax credit payments, visit IRS.gov.