Did You Receive Child Tax Credit Advance Payments in 2021? Here’s What You Need to Know Now

The American Rescue Plan of 2021 authorized the IRS to issue advance payments to families eligible for the Child Tax Credit. These monthly payments, which began in July 2021, are considered an advance on a taxpayer’s 2021 Child Tax Credit. The following are answers to some questions taxpayers may have:

Do I need to pay taxes on the advance payments?

No, the payments are advances on credits that you would otherwise claim on your 2021 taxes. If you are receiving advance payments, you will receive a Letter 6419 from the IRS. You should be sure to keep this letter for your tax records and provide a copy to your tax advisor.

What if I received advance child tax credit payments but I am not eligible?

If you are receiving advance child tax credit payments but are not eligible, you may need to pay the credit back when you file your 2021 tax return. Taxpayers with a 2021 Adjusted Gross Income of more than $60,000 (Married filing jointly), $50,000 (Head of Household), or $40,000 (single or married filing separate) will need to repay some or all of any advance payments received incorrectly.

Taxpayers who incorrectly receive payments can return advance payment checks or include the repayment in their personal tax return.

For information about the tax credit, visit childtaxcredit.gov or contact us. We are here to help.

Authored by Alyssa Hamilton, CPA

© 2022

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Key Tax Provisions in the American Rescue Plan Act of 2021 Affecting Individuals