Some taxpayers may be surprised when the expanded Child Tax Credit shrinks their refund, tax experts say.
Getting a tax refund is an eagerly anticipated event, with 3 of 4 taxpayers typically receiving a check from the IRS after they file their tax return. But this year, tax experts are warning that some people may receive a smaller check than normal.
That's because half of the expanded CTC was paid out in advance through monthly checks from July 2021 through December 2021 — parents will claim the other half of the tax credit on their tax returns before the filing deadline of April 18, 2022. To be sure, some parents were aware of this issue and opted out of the monthly prepayments because they preferred to get a bigger refund, said Mark Steber, chief tax information officer at Jackson Hewitt.
"A lot of people could be in for a rude awakening this year," said Christian Cyr, a CPA and president and chief investment officer at Cyr Financial. Likewise, some parents who are divorced or share custody of a child may be on the hook for repayment if it wasn't their year to claim the child as a dependent. The parent who claims the child as a dependent for 2021 will receive the CTC instead, and if the other parent mistakenly received the checks in 2021, they'll need to repay the money. Some people may be likely to see a bigger refund in early 2022, including families that welcomed a child into their family in 2021, tax experts said.
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