More Child Tax Credit Info

In our last post we discussed that the IRS will start to send advance payments on the enhanced child tax credit starting July 15.  We have gotten a few questions regarding how this credit will work?

Q. Does the new advance payment have an option to add qualifying dependents for new born babies or
for parents or grandparents who are appointed custodians after the 2020 return has been filed?

A. The IRS has indicated that their website will allow taxpayers to enter updated information into the system regarding their dependents.  This would include adding new dependents; eliminating that dependents that no longer qualify; or other items.  The website currently does not allow these changes yet.

Q. If I get this credit each month but then I don’t claim the dependent on my next return will I have to pay that back? 

A.  The child tax credit is not like the recovery rebate credit.  The Recovery Rebate Credit does not have to be paid back.  The child tax credit likely would have to be paid back if the child does not qualify.  However, the IRS has not issued any type of guidance on this yet. 

This is a warning for taxpayers that if they get a payment for a child that does not qualify that they may need to pay the advance back on their 2021 tax return.

These payments will not start until July 15 and the IRS will continue to update their website on details.  We will keep you posted