Note this is for tax year 2021 only.
Qualifications:
Full repayment protection:
If your main home was in the United States for more than half of 2021 AND your modified adjusted gross income is at or below the following amounts (based on 2021 tax return information), you may qualify for full repayment protection for the advance Child Tax Credit payments,.
- $60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
- $50,000 if you are filing as head of household; and
- $40,000 if you are a single filer or are married and filing a separate return.
Partial repayment protection:
Your repayment protection may be limited if your modified AGI exceeds the amounts above or your main home was not in the United States for more than half of 2021.
No repayment protection:
If your modified AGI is at or above the amounts listed below (based on 2021 tax return information), you will not qualify for repayment protection.
- $120,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
- $100,000 if you are filing as head of household; and
- $80,000 if you are a single filer or are married and filing a separate return.
How much is the repayment protection?
According to the IRS:
If you qualify for repayment protection, the amount of your tax liability from excess advance Child Tax Credit payments is reduced by up to the full repayment protection amount. The full repayment protection amount equals $2,000, multiplied by the following:
- The number of qualifying children that the IRS took into account in determining the IRS’s initial estimate of your advance Child Tax Credit payments, minus
- The number of qualifying children properly taken into account in determining the allowed Child Tax Credit amount on your 2021 tax return.
Example: You properly claimed three qualifying children on your 2020 tax return, but claim only one qualifying child on your 2021 tax return. You can receive up to $4,000 in repayment protection (that is, $2,000 for each excess qualifying child) if you qualify.
You will be able to apply the full repayment protection amount of $2,000 for each excess qualifying child if your modified adjusted gross income (AGI) is at or below the following amounts based on the filing status on your 2021 tax return:
- $60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
- $50,000 if you are filing as head of household; and
- $40,000 if you are a single filer or you are married and filing a separate return.
Does the repayment protection decrease based on my income?
Your repayment protection amount will decrease based on how much your modified adjusted gross income (AGI) is in excess of the amounts listed below:
- $60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
- $50,000 if you are filing as head of household; and
- $40,000 if you are a single filer or are married and filing a separate return.
The repayment protection amount is phased out once your modified AGI exceeds the amount below:
- 120,000 if married and filing a joint return or if filing as a qualifying widow or widower;
- $100,000 if filing as head of household; or
- $80,000 if you are a single filer or are married and filing a separate return.
How is the amount of my reduced repayment protection calculated?
Your repayment protection is reduced by the same percentage of which your actual income exceeds the modified Adjusted Gross Income for your filing status.
For example:
You filed a joint return with your spouse for tax year 2020 and claimed the Child Tax Credit for three qualifying children. The IRS estimated your total advance Child Tax Credit payment amount based on these qualifying children.
When you file your 2021 joint tax return with a modified AGI of $75,000, you claim the Child Tax Credit for only one qualifying child.
Your modified AGI of $75,000 exceeds your applicable $60,000 modified AGI threshold by 25 percent. Your potential full repayment protection amount of $4,000 (that is, $2,000 for each excess qualifying child) is reduced by 25 percent to $3,000. The remaining $1,000 will need to be repaid by the taxpayer.
What if I don't qualify for the repayment program?
If you do not qualify for repayment protection, you will need to report the entire excess amount on your 2021 tax return as additional income tax. This additional income tax will reduce the amount of your tax refund or increase your total tax due for 2021.