In July of 2021, an astounding $15 billion went out to the parents of 60 million American children through the Advance Child Tax Credit. The individual amounts are helpful: up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17. But what if you got a check for kids you do not claim on your tax returns?
What is the Advance Child Tax Credit?
In eagerness to send federal help to struggling families, the current administration fast-tracked the Advance Child Tax Credit. For some Virginia families, the July 15 deposit may have appeared in the bank before the family got the word it was coming.
The payments are scheduled to continue: August 13, and the 15th of each month through the end of the year. The Child Tax Credit has existed for years, but with families fighting financial and medical battles, this advance could ease some misery right away.
Virginia’s average annual per capita income is $39,278. A family of four (two parents, two kids between 6 and 17) getting an extra $500 a month for 6 months will effectively get a 7.6 percent raise, courtesy of Uncle Sam. It’s not chump change, whether you are married, separated, or divorced.
If you got the money and you know you should not have, the IRS may want it back.
Word For Word from the IRS
According to the Internal Revenue Service (IRS), the word-for-word qualifications for receiving the Child Tax Credit payments are as follows:
- You qualify for advance Child Tax Credit payments if you have a qualifying child. Also, you — or your spouse, if married filing a joint return — must have your main home in one of the 50 states or the District of Columbia for more than half the year. Your main home can be any location where you regularly live. Your main home may be your house, apartment, mobile home, shelter, temporary lodging, or other location and doesn’t need to be the same physical location throughout the taxable year. You don’t need a permanent address to get these payments. If you are temporarily away from your main home because of illness, education, business, vacation, or military service, you are generally treated as living in your main home. [emphasis added]
What Are Qualifying Children?
O, little words! If, Or, If …
“If you have a qualifying child” means the following for 2021, according to the IRS:
- For tax year 2021, a qualifying child is an individual who does not turn 18 before January 1, 2022, and who satisfies the following conditions:
- The individual is the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, a grandchild, niece, or nephew).
- The individual does not provide more than one-half of his or her own support during 2021.
- The individual lives with the taxpayer for more than one-half of tax year 2021.
- The individual is properly claimed as the taxpayer’s dependent.
- The individual does not file a joint return with the individual’s spouse for tax year 2021 or files it only to claim a refund of withheld income tax or estimated tax paid.
- The individual was a U.S. citizen, U.S. national, or U.S. resident alien.
“Or” means you or your spouse can claim the child as your dependent on your 2021 tax return. You cannot both claim the child.
This year’s advance credits were based on the 2020 tax returns. That means, Virginia Dad, if you claimed Little Linda on your 2020 return, you got the Advance Child Tax Credit, even if Little Linda will be claimed on your ex-spouse’s return for 2021. (Some parents alternate custody and claiming of the child annually, which is fine if you two have worked that out through your Property Settlement Agreement and the approval of a Virginia judge.)
The last little word, “If,” shows that the tax credit is conditional on being married and filing a joint return. It would not apply to separated and divorced parents.
Waiving the Child Tax Credit
The risk with taking the 2021 Advance Child Tax Credit based on 2020 returns is that, in 2022, you may have to return the money. We say may because if you earn Virginia’s average annual income, you are under the $40,000 threshold for repaying an overpayment of the Advance Child Tax Credit. You get to keep the payment. You earned over $40,000? You have to repay everything, as outlined in Kiplinger.
If you are worried about having to repay money that is not rightfully yours, you can waive the Advance Child Tax Credit through the IRS’s Child Tax Credit Update Portal. Even if the spigot ran for July and August and you received a couple of hundred dollars windfall, you can waive future payments. Notify your ex-spouse, too, so the money can go to the correct parent.
You can also check and track your eligibility for the Credit through yet another IRS tool, the Advance Child Tax Credit Eligibility Assistant.
The attorneys at The Firm For Men are not tax attorneys, but our experienced lawyers do know the ins and outs of family law, including child custody. Please contact us today or telephone our Virginia Beach offices at (757) 383-9184.