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[earn money just by signing up]Here’s why some families may have to return part of their 2021 child tax credit payments

  On July 15, millions of American families will receive the first of six child tax credit payments.

  Some families may have to pay the money back to the IRS if they receive more than they’re owed.

  ”There will be a reconciliation,” said Trenda Hackett, CPA and technical tax editor of the tax and accounting business at Thomson Reuters. “There could be some instances where your payment was in excess of what you were actually allowed on your tax return.”

  The expanded child tax credit is part of the American Rescue Plan, signed by President Joe Biden in March. For the 2021 tax year, the credit increased to $3,000 from $2,000 for dependents ages 17 and younger. It also gives an additional $600 for children under the age of 6.

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  Most families will get the first half of the credit in advance monthly payments from July to December, unless they opt out, in which case they’ll receive the full credit in a lump sum when they file their taxes in 2022. The monthly amount will be $250 for children ages 6 to 17 and $300 for children under 6 in families receiving the full credit.

  The full enhanced credit is available to all eligible children in families with adjusted gross income of less than $75,000 for single parents and $150,000 for a married couple filing jointly. It ends for individuals earning $95,000 and married couples filing jointly making $170,000, though they’d still be eligible for the regular child tax credit, meaning they’d get lower monthly payments starting in July.

  The IRS is calculating eligibility for the advance payments using the adjusted gross income and number of dependents from 2020 or 2019 tax returns. For some families, that information is outdated and could change their eligibility for the child tax credit.

  One reason that a family might receive excess payments is if their adjusted gross income went up in 2021. It could mean that they are eligible for less of the credit than they’d received, and in some cases, they will owe the IRS.

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