Here’s A Scenario:

Jack and Jill, a divorced couple, have one child,  Jay, age 4.

Jack and Jill alternate tax years for claiming Jay as a dependent.

In 2020 Jack claimed Jay and received advanced child tax credit (CTC) payments totaling $1,800 in 2021.

When Jack files his 2021 tax return, his AGI is $50,000 with a filing status of single, since he is not the custodial parent in 2021. He heard about the repayment protection and asked how much, if any, of the advanced CTC he will have to repay.

Does Jack qualify for the repayment protection? How much will he have to pay back ?

Answer:

Yes, Jack qualifies for partial repayment protection.

Single taxpayers who have an AGI between $40,000 and $80,000 will qualify for partial repayment protection.

The safe harbor amount available is $1,500, which is calculated by taking the safe harbor amount of $2,000, reduced by 25% or $500.

The 25% is determined by the excess amount above the AGI safe harbor $10,000 ($50,000 – $40,000) divided by the lower limit of $40,000.

Jack will have to repay $300 ($1,800 – $1,500) of the advanced CTC payments.