If you are in arrears with child support, your tax refund will usually be intercepted and sent to the appropriate child benefit authority through the Treasury Offset Program. The same rules applied to the first round of stimulus checks in 2020.
But what about that Reduction for children in advance $ 300 a month for parents of children under 6 years old and $ 250 a month for children 6 to 17 years old? Here’s what you need to know whether you are a parent who owes child support or your child’s other parent is in default.
If I owe child maintenance, will the IRS make extended child credits?
The parent who can claim a child as dependent on the basis of their tax return, i.e. who pays more than half of their maintenance, is the parent who receives the child credits. It is therefore unlikely that you will be entitled to the credit on behalf of a child for whom you are in arrears with child support payments.
However, if you have other children who are deemed to be your dependents and you are otherwise eligible, you will still receive the advance of $ 300 monthly child tax credit even if you are in arrears on child benefit. The IRS will not offset the prepayments for any reason, including child support debts.
However, the prepayments are only half of the expanded balance for 2021. Total balance is $ 3,600 for children under 6 years old and $ 3,000 for children 6-17 years old. The remaining half will be refunded if you do submit a tax return next year.
The other half of the balance, along with the rest of your refund, can be used to offset child benefit as usual in the next year at tax time.
This is essentially how it worked with the second and third stimulus checks. None of the payments were offset against debts of any kind, including unpaid child support. But people who qualified for the payment and didn’t receive it were required to file a 2020 tax return. They received their payments with their tax refund as Recovery Rebate Credit. However, if they had unpaid child support or back taxes, the credit was confiscated along with the rest of their refund.
Can I get my ex’s child credits if they owe me child support?
If you are the parent who pays more than half of the child’s support, you get the credits, not your ex. However, if your ex is entitled to $ 250 or $ 300 a month because they have other children, they will get it Money even if he owes you child support.
If you typically get your tax refund through the Treasury Offset Program, you might get the other half of your child tax credits with the remainder of your refund in the next year.
What if my spouse owes child support?
Since the up-front loans are not attached for child support, your monthly payments should not be affected. However, if you and your spouse are filing a joint statement, be sure to file an Injured Spouse Claim using Form 8379 when submitting your statement for 2021. This protects your half of the remaining balance from being set off.
Can the loans be attached for other debts?
The advance on the loan cannot be offset against money you owe the federal government. If you Owe taxes back, your monthly payments will not be reduced.
But the law doesn’t prevent non-state creditors from pursuing the advance loans. So if you owe state or local taxes, or if a private creditor has an attachment warrant against you, your child assets could be attached. Some states and financial institutions have chosen to protect child loan prepayments from garnishment.
The half of the balance to be paid as a refund can still be offset if you owe money to the federal government.
When do the child credits arrive?
The first child loans are upfront scheduled for July 15th. They will continue monthly through December.
Robin Hartill is a certified financial planner and senior writer at The Penny Hoarder. She writes Dear Penny, a personal financial advisor. Send your tricky money questions to [email protected]
This article originally appeared on www.thepennyhoarder.com