Child tax credit: in which cases do you have to repay it?

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Jhe Child tax credit is an annual credit available to taxpayers. It was introduced in 1997 as part of the Taxpayer Relief Act.

Normally, the tax credit amounts to $2,000 per eligible dependent. However, it has been extended to a maximum of $3,600 under the coronavirus relief package.

However, the US rescue plan made changes to the CIC for the 2021 tax year.

The amount of the credit has increased from $2,000 to $3,000 for children aged 6 to 17 and from $3,600 for children aged 5 and under.

The earned income of $2,500 dropped and the credit became fully refundable. Refund checks triggered by 2021 credit can be over $1,400

The US bailout required IRS pay half of your total credit amount in advance. By monthly payments that go from July to December 2021.

You can claim the remaining half of the credit on your 2021 tax return due April 18.

According to Rocky Mengle, “This will be done by subtracting every dollar you received from July through December from the total credit you are entitled to, and then declaring the remaining amount, if any, as a child tax credit on your 2021 statement.”

Depending on your AGI is the amount you will pay for your CTC.

If your modified AGI for 2021 does not exceed $40,000 (single registrants), $50,000 (declaring heads of household), or $60,000 (joint filers) and your primary residence was in the United States for more than half of 2021, you will not have to repay any amount of overpayment.

However, if you earned the same amount of money living Outside the United States for at least half of 2021, you may also have to pay some of your overpayment.

If your Modified AGI for the 2021 tax year is at least $80,000 (single registrants), $100,000 (declaring heads of household), or $120,000 (joint filers), you must repay all of your overpayment.


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