child tax credit advance payments

CHILD TAX CREDIT ADVANCE PAYMENTS

A warning for taxpayers receiving these payments. The credit is $3,000 for children between the ages of 6 and 18 years of age. This is an increase of $1,000 per child. For children under 6 years of age the child tax credit will be $3,600 for one year only.

Look at your 2020 tax return and the amount you received for the child tax credit. If you had federal income tax due even after applying the child tax credit then you should be careful about spending the advance child tax credit money. The advance of the child tax credit will be reconciled on your 2021 tax returns and you will have to report the total of advance child tax credit received. This will leave you with about half of the child tax credit still available to offset federal tax due. Our caution, you could end up with federal tax due by spending your child tax credit advance. For those taxpayers who received a refund we anticipate your refund to be less because you are receiving the child tax credit during the year.

We are giving you this warning so that you will not be caught wondering why your refund is less than the previous year with the credit increasing by child.

Rodney W Wicklund and Associates 2011