As a result of the child tax credit you’ve been receiving throughout the last year, your tax refund may be smaller when you file your taxes in the spring.
What’s happening: According to CNN, many parents who received the child tax credit payments throughout 2021 will likely receive a lesser tax refund in the spring of 2019.
In monthly installments from July to December, about 36 million people got half of the child tax credit, up to $300 per month for families with children 6 years old or younger and $250 per month for families 6-17 years old.
According to Business Insider, parents will be able to claim the remaining half of the tax credit on their 2021 tax returns.
In this instance, the credit is being distributed on a monthly basis for the first time. As a result, households received half of their credit one month earlier than they would have otherwise.
As Barbara Weltman, an editor of “J.K. Lasser’s Your Income Tax 2022,” explained on CNN: “One thing that is likely to happen is that consumers may receive lower refunds than they were expecting because the refund, in a sense, came in advance.”
Specifically, according to CNBC, the IRS utilized 2020 information to determine who was eligible for the tax credit. If such information changes throughout the year 2021, there is a possibility that you will owe money.
As of April Walker, lead manager of tax practice and ethics at the American Institute of Certified Public Accountants, said to CNBC, “it would either diminish your refund or increase your tax payment next April.” “That’s how it would be repaid,” says the author.