During the payment of the child tax credit to more than 36 million families, some families may have been overpaid or received the money not meant for them. These families will have to pay back.
While President Joe Biden waits awaits the approval of the U.S. Senate for his economic spending plan which would extend the payment of the child tax credit to 2022, observers are asking questions about how the funds were expended.
But, the amount parents are supposed to receive is determined by income taxes and child circumstances. Since the tax credit is based on 2019 and 2020 tax returns, some people may get overpaid or receive money that is not meant for them. In those cases, the money would need to be repaid.
These four circumstances determine if you will be refunding the child tax credit:
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Higher-income
Families with less than $75,000 for single, $112,500 for the head of household, or $150,000 for joint returns are eligible for $3,600 for children under 6 and $3,000 for children under 18. But if a family makes more than got more income than the stipulated threshold, such family will have to return the child tax credit received.
If a parent filing single made $75,000 in 2020, but $90,000 in 2021, that parent would need to repay some or all of the overpayment they received when filing 2021 tax returns.
Custody/dependent change
If there were changes in custody or marital changes in 2021, then a parent may receive the money they shouldn’t (or didn’t receive the money they’re eligible for.)
If a child lives with a parentless than half of the year, the parent is not eligible to receive the credit. If dependents changed in 2021 compared to 2020, that could also result in an overpayment.
Filing status changed
If a parent’s tax filing status changes, an overpayment can occur. For instance, if the parent changed status from joint to single, this could result in an overpayment.
Change of address
If a qualifying parent lived outside the U.S. for more than half the year in 2021, then the money child tax credit received will return.
