You may have to repay some of the new $ 3000 child tax credit

The IRS uses tax returns from 2020 (or, if not available, 2019 returns) to qualify taxpayers for the child tax credit and the amount of the advance payments.

The advance payments amount to half of the taxpayer’s total credit for 2021. The U.S. rescue plan has increased the maximum credit amount to $ 3,000 per child ages 6 to 17 and $ 3,600 for younger children.

The remaining half will be claimed during the tax season next year.

Information reported on next year’s tax return may differ from current IRS data – and thus change the total credit amount.

This could happen, for example, if a taxpayer had another child in 2021. That could qualify them for an extra $ 3,600.

A tax bill can occur if a payer’s income rises dramatically this year from the income reported on a 2020 return. It can reduce someone’s credit amount, or depend on the earnings, completely disqualify them.

The $ 1.9 billion Covid emergency measure, signed by President Joe Biden in March, offers taxpayers some protection to limit the amount of overpayment.

First, the law instructs the Treasury Department to create an online portal for taxpayers to update information that has changed during the calendar year.

By law, taxpayers must allow the following information: the number of qualifying children (including birth), marital status, significant change in income, and other factors that the Treasury deems appropriate.

The portal should also enable taxpayers not to receive tax payments in advance.

The IRS is on schedule to launch the portal by July 1, the agency’s commissioner Charles Rettig said during a hearing on the Senate Finance Committee last week.

It is unclear whether the agency will include additional details, such as change of address or payment method such as direct deposit, tax experts said.

“We’re starting by July 1st with the absolute best product we can put together,” Rettig said. “We try to make it as user-friendly as possible,” he added.

Families without internet access will be able to update information in other ways, such as by paper form or by visiting an IRS office, Rettig said during the trial.

Advance payments only start after taxpayers have had the opportunity to update and sign out information, he confirmed.

However, there will not be much time to adjust data before the IRS starts paying out funds, said Nina Olson, executive director and founder of the Center for Taxpayer Rights.

“If the portal opens July 1st, but the first payments begin July 1st, when’s your window to sign out or update?” Ask Olson.

However, some administrative issues may be understandable given the short time frame in which the IRS launched the program, she said.

“[The agency] are given four months to deliver this thing, ‘Olson said.

However, lower earners can be protected from repaying a portion of the money.

According to the Congressional Research Service, up to $ 2,000 per child can be protected from repayment if the error is due to net changes in the number of qualifying children.

However, credit amounts in excess of $ 2000 will still need to be repaid.

Single documents with less than $ 40,000 income qualify for the full “safe haven” amount. (Heads of households and couples filing a joint return qualify if their income is less than $ 50,000 and $ 60,000, respectively.)

The protected amount of $ 2,000 is gradually withdrawn as the income increases. Single documents with more than $ 80,000 income (or $ 100,000 for household heads and $ 120,000 for joint filers) are not protected against any overpayment.

“People should not rely on it,” Walker said of the safe haven.

“What I would say to taxpayers is note when the portal is available,” she added. And think of what could happen in 2021 that the [credit] amount. “