As part of the stimulus relief bill, parents enjoyed — for the first time ever — advance payments of the child tax credit (CTC) in six monthly installments last year. Half of the full benefit was paid out in monthly payments, with the other half to be claimed now, during tax season. Ordinarily, the child tax credit max is $2,000 which can only be claimed during tax season. In 2021, the max benefit was $3,600 per eligible child under the age of six, with $1,800 paid out in $300 monthly payments from July through August. For eligible children from ages 6 through 17, the maximum benefit was $3,000, with half being paid out on a similar (but slightly reduced in terms of payment amounts) schedule.
See: Child Tax Credit Refunds Won’t Be Seized From Borrowers With Past-Due Student Loans
Find: What 2022 Means for Stimulus Checks and the Child Tax Credit
If you were a recipient of this credit, you may expect to receive a smaller tax refund this year than you are used to. This is because you already received half of the total special benefit in monthly installments in 2021, and will now receive between $1,500 to $1,800 this year, where under normal circumstances you would be receiving at least $2,000 per child under the age of 17 in one shot as a regular refund. In total, you will be receiving more than usual once the credit is reconciled, just not in one shot — at tax time — like you may be used to.
Additionally, parents should brace for smaller returns if their income significantly changed in 2021 as compared to 2020. The child tax credit was distributed to families based on 2020 or 2019 tax returns. If your income increased during 2021, but you still received CTC payments based on old tax returns, you will be expected to pay the money back if your new salary exceeds the income threshold for the tax credit. Said threshold is $75,000 for those filing as single and $150,000 for those filing jointly.
Learn: IRS Warns of Potentially Outdated Information on Child Tax Credit Portal, Mailed CTC Letters
Explore: Are Child Tax Credit Payments Taxable?
Those who decided to put off receiving any money last year via the advance child tax credit payments will likely be of the few who receive a larger refund than expected. These are families which did not receive any advance payments at all from the advance monthly installments, instead deciding to opt out. Said families will receive $3,600 per eligible child during tax season this year.
More From GOBankingRates
Can You Open a Bank Account Without a Social Security Number?
How Much Money You Should Keep in Your Standard Savings Account, According to Experts
How to Easily Add $500 to Your Wallet This Month
16 Effective Tips and Tricks To Help You Save Money In 2022
This article originally appeared on GOBankingRates.com: Child Tax Credit Payments Will Probably Lower Your Tax Refund Amount — Here’s Why
Source: Read Full Article