Advanced Child Tax Credit – Do you need to repay it?

Advanced Child Tax Credit – Do you need to repay it?

July through December of 2021, eligible parents/caregivers of minor children received “Advanced Child Tax Credit” payments directly to their checking account. If you received these payments, now is the time to take action and identify whether you need to return some cash, or if perhaps you’re owed additional money.

By the end of January 2022, you should receive IRS Letter 6419 which details the total amount of Advanced Child Tax Credit payments you received last year.

Reconcile the tax credits (to determine where you stand)

When filing your 2021 federal tax return, you need to identify the amount of the Child Tax Credit that you’re truly eligible to claim on your 2021 return. You will do so on Schedule 8812.

Results are in…

You’re owed more — If the amount of the Child Tax Credit you’re entitled to is more than the advanced credits you received last year, then you’ll get the remaining amount as a tax credit on this year’s return.

You accidentally received too much — You’ll need to repay the IRS the amount of the excess credit. Either in the form of a reduced refund or a larger balance due. Some common reasons include:

  • You had a filing status change that made you ineligible in 2021
  • Your income increased beyond the threshold
  • The child resided more than ½ the year with someone else
  • Your main home was outside the US for more than ½ the year

You didn’t get any advance payments but you’re entitled to the credit — You’ll get a lump-sum credit by claiming the Child Tax Credit when you file a 2021 federal income tax return. This includes families who don’t normally need to file a return.

Sending you good luck and endless patience with your tax preparation!


MainStreet Team
MainStreet Team

MainStreet Financial Planning, Inc., an independent fee-only financial planning firm was founded in Maryland in 2002 by Jim Ludwick, CFP® who passionately believed that financial planning advice should be accessible to people from all walks of life without product sales and investment management services. In 2006 Anna Sergunina, CFP® joined the team and together they grew MainStreet Financial to a nationally recognized company, with a team of 6 staff members and 5 offices across the country.

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