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You’ll Probably Get A Smaller Refund If You Claim The Child Tax Credit |Updated

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Last year, as part of the stimulus relief bill, parents were able to receive the child tax credit (CTC) in six monthly instalments for the first time in their history. A portion of the benefit was paid out in monthly instalments, and the rest will be claimed at tax time. Ordinarily, only during the filing season can taxpayers claim the full $2,000 in child tax credits. For children under the age of six, the maximum benefit in 2021 was $3,600. Of this amount, $1,800 was paid out in monthly instalments of $300 each from July through August. The maximum benefit for children ages 6 to 17 was $3,000, with half being paid out on a similar (though slightly reduced in terms of payment amounts) schedule.

You’ll Probably Get A Smaller Refund If You Claim The Child Tax Credit |Updated

It’s possible that you’ll get a smaller tax refund this year if you were a recipient of this credit. To put it another way, in normal circumstances, you would have received at least $2,000 per child under the age of 17 in a single payment of at least $2,000 in 2021, and this year you’ll receive between $1,500 and $1,800 instead. Once the credit is reconciled, you will receive more than usual, but not in a single shot — at tax time — as you may be accustomed to.

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It’s also a good idea for parents to prepare for lower returns if their income changes significantly in 2021 than in 2020. Families received the child tax credit based on their 2020 or 2019 tax returns. Even if your income rises in 2021, you will be required to repay any CTC payments you received based on old tax returns if your new salary exceeds the tax credit threshold. This threshold is $75,000 for individuals and $150,000 for married couples filing separately.

Most people will receive a smaller refund this year than they expected because of the advance child tax credit payments made last year. Instead of receiving advance payments from the monthly instalments, these families decided to opt-out of the programme. During this year’s tax season, these families will each receive $3,600 for each eligible child.

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