As With Coronavirus Stimulus Checks You May Not Have To Return Extra CTC Back

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The IRS has already sent out the first batch of the expanded child tax credit payment to millions of eligible families. Similar to the coronavirus stimulus checks, these payments are an advance tax credit for 2021, but are based on 2019 or 2020 tax returns. And, similar to coronavirus stimulus checks, families may not have to return any extra money they got as a CTC (child tax credit) payment, except for in a few scenarios.

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Coronavirus Stimulus Checks: Scenarios When You Won’t Need To Return Extra CTC

Your 2019 or 2020 tax return determines the amount of the monthly child tax credit payment. Since the child tax credit payment is an advance payment, the IRS will recalculate the amount when you file your taxes next year to determine whether you were over or underpaid.

There is still some time left before you will file your taxes next year. So, many things may change by then, including a drop or rise in your income, you have a new baby, or one of your dependents becomes ineligible for the payment.

Such things may change your eligibility for the payment, making you qualify for more or less payment. However, there are a few scenarios when you won’t have to pay any money back.

The first scenario is if you have un-enrolled or opted out of the monthly child tax credit payments. In this case, you won’t be getting any monthly payment, rather you will get one large payment when you file your taxes next year. Since the payment will be on the basis of your latest tax return, you won’t have to return any money back as well.

'Repayment Protection' For Some Taxpayers

Another scenario when you won’t have to return any money back to the IRS is if your AGI (adjusted gross income) for 2021 is below a set income level. The IRS has introduced such income levels, or the "repayment protection" to ensure that lower income families don’t have to worry about the repayment even if they got more money.

Those with income above the set level, would have to pay the money back only by the amount their income exceeds the set level. The IRS has also set up income levels above which the repayment protection phases out, or the people with AGI above this income level would owe a full repayment.

Single Filers with AGI of up to $40,000 will qualify for full repayment protection, while the repayment protection phases out for those with AGI over $80,000. Head of household with AGI of up to $50,000 will qualify for full repayment protection, while the repayment protection phases out for those with AGI over $100,000. Married (filing jointly) taxpayers with AGI of up to $60,000 will qualify for full repayment protection, while the repayment protection phases out for those with AGI over $120,000.

Early next year, the IRS will be sending out a letter that will assist taxpayers in determining if they were overpaid, and if they need to repay the money back.