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Many American families received advance Child Tax Credit payments during the second half of 2021. The Child Tax Credit is usually claimed in full on a taxpayer’s tax return. Families that received advance payments will need to account for those payments when filing taxes.
What are advance child tax payments?
If you are a taxpayer with eligible dependents, you likely receive a Child Tax Credit on your taxes each year. In 2021, Congress passed the American Rescue Plan Act, which allowed 50 percent of this credit to be paid monthly through the second half of 2021.
Do I claim advance child tax payments on my tax return?
According to IRS.gov, if you received advance payments, you must compare the advance Child Tax Credit payments you received with the amount of Child Tax Credit you can properly claim on your 2021 tax return.
If you received less than the amount you're eligible for, you'll claim a credit for the remaining amount of Child Tax Credit on your 2021 tax return. If you received more than the amount you're eligible for, you may need to repay some or all of that excess payment when you file.
In January 2022, the IRS will send a letter providing the total amount of advance Child Tax Credit payments you received in 2021. Keep this and any other IRS letters you receive about advance Child Tax Credit payments with your tax records and refer to them when you file.
Are advance Child Tax Credit payments income?
Advance Child Tax Credit payments are not income and will not be reported as income on your 2021 tax return.
For more information on reconciling your advance Child Tax Credit payments, visit IRS.gov.