2021 Child Tax Credit and Advance Child Tax Credit Payments — Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return

A1. When you file your 2021 tax return during the 2022 tax filing season, you will need to compare:

  1. The total amount of the advance Child Tax Credit payments that you received during 2021; with
  2. The amount of the Child Tax Credit that you can properly claim on your 2021 tax return.

Excess Child Tax Credit Amount: If the amount of your Child Tax Credit exceeds the total amount of your advance Child Tax Credit payments, you can claim the remaining amount of your Child Tax Credit on your 2021 tax return.

Excess Advance Child Tax Credit Payment Amount: If you receive a total amount of advance Child Tax Credit payments that exceeds the amount of Child Tax Credit that you can properly claim on your 2021 tax year, you may need to repay to the IRS some or all of that excess payment.

In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.

A2. The amount of advance Child Tax Credit payments that you receive during 2021 is based on the IRS’s estimate of the Child Tax Credit amount that you properly would be allowed for the 2021 tax year. The law requires this estimate to be based on two primary sources of information:

  1. Your 2020 tax year return or, if that return is not available, your 2019 tax year return; and
  2. Any updated information you provide to the IRS in 2021, including information provided through the Child Tax Credit Update Portal (CTC UP), which will allow you to update with the IRS your Child Tax Credit information throughout 2021, including any changes in the number of your qualifying children, changes in your income, and changes in your filing status.

Family and life situations can be fluid throughout a given year. The following list provides examples of changes that could result in excess advance Child Tax Credit payments.

  • A qualifying child who resided with you may change homes during 2021 and reside more than half of the 2021 tax year with a different individual.
  • Your income increases in 2021.
  • Your filing status changes for 2021.
  • Your main home was outside of the United States for more than half of 2021.

As a result of these types of ordinary family and life changes, you may receive a total amount of advance Child Tax Credit payments that exceeds the amount of Child Tax Credit that you properly are allowed on your 2021 tax return.

For more information regarding eligibility for advance Child Tax Credit payments, including the definition of your main home, see Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit.

A3. Yes. The IRS urges you to use the Child Tax Credit Update Portal (CTC UP) throughout 2021 to help ensure that the IRS has the most up-to-date information regarding your eligibility for the 2021 Child Tax Credit. This updated information will help the IRS continue to improve the accuracy of the IRS’s estimate of the Child Tax Credit amount that you will be allowed on your 2021 tax return. CTC UP launched and will allow you to elect not to receive advance Child Tax Credit payments and update your bank account information. The IRS will add features to CTC UP later this year, which are described in What if information about my bank, mailing address, income, or family has changed during 2021?

With this updated estimate of your properly allowed Child Tax Credit amount, the IRS can appropriately reduce your advance Child Tax Credit payment amounts throughout 2021.

Important: These adjustments will reduce the potential for advance Child Tax Credit overpayments to you, which you otherwise might need to pay back to the IRS in 2022.

For more information regarding CTC UP, and when new features will be added to CTC UP, see Topic F: Updating Your Child Tax Credit Information During 2021.

A4. Maybe. If you qualify for the repayment protection described in this Topic H, you will be excused from repaying some or all of the excess amount. If you do not qualify for repayment protection, you will need to report the entire excess amount on your 2021 tax return as additional income tax. This additional income tax will reduce the amount of your tax refund or increase your total tax due for 2021.

A5. You won’t qualify for any repayment protection if your modified AGI is at or above the amounts listed below based on the filing status on your 2021 tax return.

  • $120,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
  • $100,000 if you are filing as head of household; and
  • $80,000 if you are a single filer or are married and filing a separate return.

For information on the definition of modified AGI, see Topic C: Calculation of the 2021 Child Tax Credit.

A6. You qualify for full repayment protection and won’t need to repay any excess amount if your main home was in the United States for more than half of 2021 and your modified adjusted gross income (AGI) for 2021 is at or below the following amount based on the filing status on your 2021 tax return:

  • $60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
  • $50,000 if you are filing as head of household; and
  • $40,000 if you are a single filer or are married and filing a separate return.

Your repayment protection may be limited if your modified AGI exceeds these amounts or your main home was not in the United States for more than half of 2021.

For more on the definition of your main home, see Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit. For information on the definition of modified AGI, see Topic C: Calculation of the 2021 Child Tax Credit.

A7. If you qualify for repayment protection, the amount of your tax liability from excess advance Child Tax Credit payments is reduced by up to the full repayment protection amount. The full repayment protection amount equals $2,000, multiplied by the following:

  • The number of qualifying children that the IRS took into account in determining the IRS’s initial estimate of your advance Child Tax Credit payments, minus
  • The number of qualifying children properly taken into account in determining the allowed Child Tax Credit amount on your 2021 tax return.

Example: You properly claimed three qualifying children on your 2020 tax return, but claim only one qualifying child on your 2021 tax return. You can receive up to $4,000 in repayment protection (that is, $2,000 for each excess qualifying child) if you qualify.

You will be able to apply the full repayment protection amount of $2,000 for each excess qualifying child if your modified adjusted gross income (AGI) is at or below the following amounts based on the filing status on your 2021 tax return:

  • $60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
  • $50,000 if you are filing as head of household; and
  • $40,000 if you are a single filer or you are married and filing a separate return.

For information on the definition of modified AGI, see Topic C: Calculation of the 2021 Child Tax Credit.

A8. Yes. Your repayment protection amount will decrease based on how much your modified adjusted gross income (AGI) is greater than the following amounts based on the filing status on your 2021 tax return:

  • $60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
  • $50,000 if you are filing as head of household; and
  • $40,000 if you are a single filer or are married and filing a separate return.

This repayment protection amount is then phased out – or reduced – as your modified AGI exceeds the amount above. Your repayment protection amount will equal $0 and your repayment amount will not be reduced when your modified AGI is at or above this higher amount based on the filing status on your 2021 tax return:

  • $120,000 if married and filing a joint return or if filing as a qualifying widow or widower;
  • $100,000 if filing as head of household; or
  • $80,000 if you are a single filer or are married and filing a separate return.

Example: You filed a joint return with your spouse for tax year 2020 and properly claimed the Child Tax Credit for three qualifying children. The IRS estimated your total advance Child Tax Credit payment amount based on these qualifying children. However, when you file your 2021 joint tax return with a modified AGI of $75,000, you claim the Child Tax Credit for only one qualifying child – and therefore have two excess qualifying children. Your modified AGI of $75,000 exceeds your applicable $60,000 modified AGI threshold by 25 percent. Your potential full repayment protection amount of $4,000 (that is, $2,000 for each excess qualifying child) is reduced by 25 percent to $3,000.

A9. The majority of individuals who need to repay excess advance Child Tax Credit payments will satisfy that balance through a reduction in their expected federal income tax refund. However, if you owe a balance in excess of your refund, the IRS routinely works with taxpayers who owe amounts they cannot afford to pay. The process to make a payment arrangement for these balances due is the same as for other tax balances. For further information on how to pay your past due federal income tax liability, see Paying Your Taxes.

A10. Yes. In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.

This letter will be mailed to your address on file as of the letter’s mailing date. This generally will be the address on your most recent tax return, or as updated through the Child Tax Credit Update Portal (CTC UP) or the United States Postal Service (USPS). For more information regarding CTC UP, see Topic F: Updating Your Child Tax Credit Information During 2021.