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Child tax credit: You may need to pay it back, or have IRS seize credits

Millions of Americans took advantage of receiving advanced payments on their child tax credit in 2021, but some may be forced to pay them back.

tax forms used to file returns with the IRS, which may seize some credits like the child tax credit

For the year 2021, child tax credits were boosted from $2,000 to as much as $3,600 per child.

This was done under the American Rescue Act in March of 2021.

Those who the IRS deemed eligible based on 2019 and 2020 tax returns could receive monthly payments from July through Dec. 2021 worth up to $300.

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This has expired, and now families who relied on the payments are falling back into poverty.

In some cases, there are 2 groups of people who could lose their credits entirely to the IRS.

Two groups at risk of having their child tax credit seized by the IRS

Those who didn’t opt out of the child tax credit

Some families did not opt out despite knowing they had changes occur that made them ineligible.

This means any advanced payments they received will need to be paid back.

The requirements were couples filing together had to make less than $150,000 and singles that were head of household $112,500.

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The issue may have happened when your 2019 or 2020 returns had that amount, but your 2021 was going to have a higher amount.

This could have also impacted divorced parents with changes in custody.

You may need to pay back up to $1,800 per child.

Anyone with federal debt that claimed the child tax credit

Those with overdue federal debt can see their tax credits seized by the IRS.

This includes child tax credits.


Filing your taxes right the first time to avoid delays

Past debt could be

  • child support
  • overdue taxes
  • federal debt
  • state debt

The only ones safe from having their credits seized, for now, are those with federal student debt.

This is because the education department will not be seizing credits right now while loans are in default.

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