Child Tax Credit on 2021 Income Tax Returns

If you received advance child tax credits in 2021, you’re likely to receive a special IRS Letter 6519 (COVID Tax Tip 2022-03). Do not throw it out. It will be used to help you figure the amount of the child tax credit to which you are entitled on your 2021 return. If you received advance payments that exceed the credit amount for which you are eligible, some or all of the excess may have to be repaid (explained below). If you did not receive the full amount to which are you entitled, you may claim an additional amount. The child tax credit is figured on Schedule 8812, which has been revised for the 2021 return to reflect the higher child tax credit amount and other changes for 2021.

The IRS issued extensive FAQs on the child tax credit and the advance child tax credit (FS-2022-07, News Release IR-2022-22). The FAQs are broken down into 14 topics:

• Topic A: General Information
• Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit
• Topic C: Calculation of the 2021 Child Tax Credit
• Topic D: Calculation of Advance Child Tax Credit Payments
• Topic E: Advance Payment Process of the Child Tax Credit
• Topic F: Updating Your Child Tax Credit Information During 2021
• Topic G: Receiving Advance Child Tax Credit Payments
• Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return
• Topic I: U.S. Territory Residents and Advance Child Tax Credit Payments
• Topic J: Unenrolling from Advance Payments
• Topic K: Verifying Your Identity to View your Payments
• Topic L: Commonly Asked Shared-Custody Questions
• Topic M: Commonly Asked Immigration-Related Questions
• Topic N: Returning a Payment

Some of the information may be helpful in preparing 2021 returns. For example, there is guidance (Topic H, Q&A 3-7) on repayment protection for those who received advance child tax credit payments in excess of what they are entitled to on their 2021 return. They qualify for “full” repayment protection and do not have to repay any excess if their main home was in the U.S. for over half of 2021 and modified adjusted gross income (MAGI) is at or below $60,000 for joint filers or qualifying widow(er)s, $50,000 for heads of households, and $40,000 for filers who are single or married filing separately. If MAGI is above these amounts, repayment protection is phased out and full repayment will be required when MAGI equals or exceeds $120,000 for joint filers or qualifying widow(er)s, $100,000 for heads of households, and $80,000 if single or married filing separately.