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How to Report Advance Child Tax Credit Payments on Your 2021 Tax Return
Did you receive early child tax credit payments last year? Report them correctly to get the rest of your money.
Clifford ColbyManaging Editor
Clifford is a managing editor at CNET, where he leads How-To coverage. He spent a handful of years at Peachpit Press, editing books on everything from the first iPhone to Python. He also worked at a handful of now-dead computer magazines, including MacWEEK and MacUser. Unrelated, he roots for the Oakland A's.
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Last year's monthly payments were based on either your 2019 or 2020 tax return. However, if your life circumstances changed since you last filed, it could've resulted in an overpayment. For instance, if you received an income increase after you filed your 2020 taxes or if your kid aged out of an eligibility bracket, you might owe money to the IRS when an adjustment is made on your 2021 return.
How do I enter advance child tax credit payments on my 2021 tax return?
Although the advance child tax credit payments are not taxable income, you still want to report them on your taxes. Even if you received all six early payments, you still have half of the credit coming -- another $1,800 for kids under 6 and $1,500 for kids 6 to 17 --- with your 2021 tax refund. To get that money, you need to properly report those advance payments.
If you are using tax software to prepare your 2021 tax return, the program will specifically ask you how much you received in total from advance child tax credit payments between July and December 2021. You can find this information in IRS Letter 6419, which was mailed to recipients in late January. If you did not receive Letter 6419 or you lost it, you can look up the total amount of child tax credit payments received using an online IRS account.
Once you've entered the total amount of your child tax credit payments into the tax software, the program will do the rest of the work for you, completing the necessary IRS forms and adjusting your tax refund accordingly.
If you're a DIY tax filer, you'll need to report your advance child tax credit payments on Schedule 8812, which will help you calculate the remaining credit that will be applied to your 2021 tax refund.
Will I owe the IRS money for last year's child tax credit checks?
The short answer is no, but you still need to know some financial details. The child tax credit checks don't count as income, so you won't have to pay income tax on the payments, said Mark Jaeger, vice president of tax operations at TaxAct. The IRS referred to these checks as advance payments ahead of 2021 tax season: "That means you're simply getting the payments sooner rather than waiting to receive that money when you file."
While you won't pay taxes this year on the payments you receive in 2021, you still may need to repay the IRS some part of the advance payment when you file your income tax return in 2022. We'll explain below.
Will I have to return the money if I got more than I was supposed to?
Maybe. Unless you opted out of the monthly child tax credit payments, you should've automatically received half of your estimated amount in 2021 from the IRS. Forgoing the monthly payments means that instead of receiving smaller installments between July and December last year, you'll simply collect your money when you file your 2021 tax return.
If someone in your household got a better-paying job last year, increasing the adjusted gross income and pushing you above or out of a previous income bracket.
If one of your dependents aged out of an age bracket sometime last year. For example, if your 5-year-old turned 6 in 2021, that would qualify you for a smaller payment. Or if your 17-year-old turned 18 in 2021, you would no longer be eligible for the amount you received.
If there's a change in custody, such as if parents divorced and have a shared custody arrangement, or if the parent with custody changes from one year to the next. In a joint custody situation, only one parent can claim the credit for a given child.
If your main home was in the US for more than half of 2020, but not in 2021, you'd no longer qualify for payments.
Those kinds of changes in circumstances are a big reason why the IRS gave folks the chance to opt out of the advance payments.
What are the income caps for repaying child tax credit money?
If your household's adjusted gross income, or AGI, for 2021 was below a set income level, you likely won't owe the IRS anything, even if you received more child tax credit money than you technically should have. This is what the IRS calls "repayment protection" so that lower-income families won't be on the hook to repay any money. Above a certain income level, the amount you need to repay increases or phases in until you owe full repayment.
The letter the IRS sent out between December 2021 and January 2022 can help you determine if you received an overpayment and if you need to repay all or part of the advance payments. See below for more on that letter.
Income caps for repaying child tax credit payments
Qualify for full repayment protection
Repayment protection phases out
Up to $40,000
Filing as head of household
Up to $50,000
Married filing a joint return
Up to $60,000
Will the rest of my child tax credit money arrive with my tax refund?
Yes. After you compare the information on the letter the IRS sent you with what you're eligible for, you may discover you're due more than you received in advance payments, based on your actual 2021 income. If that's the case, you can claim the remaining amount of your child tax credit when you file your return.
Does child tax credit money affect other federal benefit amounts I receive?
According to the IRS, no. Because the advance child tax credit payments don't count as income, federal, state or local agencies can't use the amount when determining if you or your family are eligible for other benefits or assistance.
For more financial benefits this year, here's how to save money on child care costs.
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