The Inner Income Service has revised and up to date the solutions it beforehand supplied to incessantly requested questions on the 2021 Youngster Tax Credit score and Advance Youngster Tax Credit score.
On Friday, the IRS posted a revised reality sheet containing a variety of revisions.
The FAQ revisions are available in a number of areas:
- Matter A: Basic Info: Up to date questions 1,2,3,4,5,8,9,10,11,13,14,15,16;
- Matter E: Advance Fee Means of the Youngster Tax Credit score: Up to date questions 2,3;
- Matter F: Updating Your Youngster Tax Credit score Info Throughout 2021: Eliminated questions 1, 2 and up to date 3, 4;
- Matter G: Receiving Advance Youngster Tax Credit score Funds: Up to date questions 1, 6, 7, 9, 10, 11;
- Matter H: Reconciling Your Advance Youngster Tax Credit score Funds on Your 2021 Tax Return: Up to date questions 1, 2, 9 and eliminated 10;
- Matter J: Unenrolling from Advance Funds: Up to date query 1 and eliminated 2, 3, 4, 5, 6, 7;
- Matter Okay: Verifying Your Id to View your Funds, 2021 Youngster Tax Credit score: Up to date 2, 3, 5, 6 and eliminated 7; and
- Matter L: Generally Requested Shared-Custody Questions: Up to date 1 and a couple of.
The Advance Youngster Tax Credit score was included as a part of the Biden administration’s American Rescue Plan final plan, which supplied month-to-month funds within the second half of the 12 months on an expanded model of the Youngster Tax Credit score. The advance credit supplied early funds from the IRS of 50% of the estimated quantity of the Youngster Tax Credit score that taxpayers may declare on their 2021 tax return. If the IRS processed the dad and mom’ 2020 tax return or 2019 tax return earlier than the tip of June 2021, the month-to-month funds began in July and continued by December 2021, primarily based on the data contained in that earlier return. The IRS famous in its revised reality sheet that Advance Youngster Tax Credit score fee quantities weren’t primarily based on the Credit score for Different Dependents, which isn’t refundable.
The IRS headquarters in Washington.
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One of many sections within the revised reality sheet offers with dad and mom with shared custody and what occurs if certainly one of them obtained the advance funds to which they might not have been entitled.
The IRS famous that it decided who obtained 2021 advance Youngster Tax Credit score funds primarily based on the data on their 2020 tax return, or their 2019 return if the IRS hadn’t processed their 2020 return. In the event that they claimed the Youngster Tax Credit score for his or her little one on their 2020 return, then they might have obtained the advance Youngster Tax Credit score funds. If the kid’s different father or mother claimed the Youngster Tax Credit score on their 2020 tax return, then they might have obtained the advance Youngster Tax Credit score funds.
“Should you knew you wouldn’t be eligible to say the Youngster Tax Credit score in your 2021 return (the one due in April of 2022), then you need to have unenrolled from receiving month-to-month funds,” mentioned the IRS. “Receiving month-to-month funds throughout 2021 may imply that it’s important to repay these funds while you file your 2021 tax return. If issues modified once more and you might be entitled to the Youngster Tax Credit score for 2021, you may declare the total quantity in your 2021 tax return while you file it.”
In some circumstances, dad and mom might have agreed that, for federal revenue tax functions, one will declare the kid for every even-numbered 12 months whereas the opposite father or mother will declare the kid for every odd-numbered 12 months. One of many FAQ objects considerations a father or mother who claimed the Youngster Tax Credit score for the kid on their 2020 tax return, however the IRS additionally disbursed the 2021 advance Youngster Tax Credit score funds to them despite the fact that they weren’t planning to say the Youngster Tax Credit score on their 2021 tax return.
“Since you claimed your little one in your 2020 tax return, the IRS robotically disbursed advance Youngster Tax Credit score funds to you despite the fact that you knew you wouldn’t be claiming your little one in your 2021 tax return,” mentioned the IRS. “While you file your 2021 tax return (the one due in April of 2022), you possibly can should pay again the advance funds that exceed the quantity of the Youngster Tax Credit score you are entitled to say on that return.”
Nevertheless, a father or mother could also be excused from repaying some or the entire extra quantity in the event that they qualify for reimbursement safety. The very fact sheet supplies additional details about qualifying for reimbursement safety when reconciling the Advance Youngster Tax Credit score Funds on a tax return.