tax breaks — February 23, 2022

Some Taxpayers Protected from CTC Repayment Requirements

by Susannah Hornback


Some Taxpayers Protected from CTC Repayment Requirements

When the American Rescue Plan (ARPA) expanded the Child Tax Credit (CTC), half of the refundable tax break became available to families through advance payments in 2021. The IRS sent CTC payments to families who qualified at the time, but the year wasn't complete. Many families' qualifications changed as the year went on.

These changes, usually caused by things like a significant raise, new cash flow, or trading years with an ex-spouse to claim a dependent, caused some to qualify for less (or none) of the CTC.

So, what happens if the IRS sent you too much CTC cash in 2021?

Most people are required to repay excess CTC amounts

When you file your 2021 tax return, your Child Tax Credit gets calculated for real—no estimates this time—because the year is over and all the qualifying elements are set in stone (number of children, income amount, etc.).

If you qualify for more of the CTC than you received in 2021, you get the rest either as a refund or a reduction of taxes owed, depending on the rest of your tax situation.

However, if the CTC payments you received in 2021 are more than you qualify for, you’ll owe any excess back when you file. That will either reduce your refund, or it will be added to your tax bill.

However, lower-income taxpayers could qualify for repayment protection

If your main home was in the U.S. for more than six months in 2021, you don’t have to repay any excess CTC payments if your income is less than:

  • $60,000 for married filing jointly
  • $60,000 for qualifying widow or widower
  • $50,000 for head of household
  • $40,000 for single or married filing separately

If your income is above those levels, you could still qualify for some repayment protection; you will still have to pay back some of the excess payment, but you might not have to pay back the entire amount.

Repayment protection phases out completely when your income level reaches:

  • $120,000 for married filing jointly
  • $120,000 for qualifying widow or widower
  • $100,000 for head of household
  • $80,000 for single or married filing separate

You don’t have to apply for repayment protection—it’s calculated with the rest of your tax return

No need to update your information using an IRS portal; just file your taxes, and we’ll look at your income level and calculate how much repayment protection you qualify for in the background.

Feel good about getting your Child Tax Credit

Listen, we know this year has had a lot of new rules and regulations, but you don’t have to worry about keeping it all under wraps. That’s where we come in; when you file with, we’ll walk you through the process and ask questions designed to get every tax break you qualify for.

Oh, and the best part? You can claim the CTC and any other tax breaks for no extra cost. Our flat $25 is for all your filing needs, from claiming dependents to reporting investment income and more.

Now that feels good.

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