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My husband and I are separated and share custody of our 4 kidswho gets the new child tax credit payments

Published by Business Insider on Fri, 02 Apr 2021

<p><img src="https://static2.businessinsider.com/image/6067428b856cd700198a2e3d-1765/single-mom-child-tax-credit.jpg" border="0" alt="single mom child tax credit" data-mce-source="Getty Images/Gilbert Espinoza, Insider"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p><strong>Question:</strong> <em>My husband and I separated in 2020. We have four children. He claimed two children on his taxes and I claimed the other two. Now in 2021, I don't have any documentation stating that I am the custodial parent but I have all four of the children every day and he comes to visit for about two to three hours each week. How can I let [the IRS] know that the [child tax credit] should come to me and not him since I am the one that has the children'</em></p><p><em>Reader from North Carolina</em></p><p><strong>Answer:</strong>The massive economic relief bill that was signed into law in March, better known as the American Rescue Plan, greatly expands <a href="https://www.businessinsider.com/personal-finance/child-tax-credit-stimulus-bill-2021-3" target="_blank" rel="noopener">the child tax credit</a>.</p><p>With an evolving tax situation like yours, the logistics can get confusing. But the good news is that there's a solution (and you likely have a lot of cash coming your way).</p><p>As a reminder, the American Rescue Plan changes:</p><p>1) <em>Who</em> is eligible for the <a href="https://www.businessinsider.com/personal-finance/what-is-the-child-tax-credit-2021-3" target="_blank" rel="noopener">child tax credit</a>more low-income families and parents with 17 year olds</p><p>2) <em>How much</em> the credit paysup to $3,600 per child under age 6 and $3,000 per child aged 6 to 17</p><p>3) <em>When</em> the credit payshalf of it will go out as cash payments this year and half will be available to lower your tax bill when you file next year</p><p>Here's a brief rundown of the new credit compared to the 2020 version of the credit:</p><table style="border-collapse: collapse; width: 100%; height: 265px;" border="1"><tbody><tr style="height: 21px;"><td style="width: 30.606%; height: 21px;"></td><td style="width: 34.5023%; height: 21px;">New (2021)</td><td style="width: 34.8916%; height: 21px;">Current (2020 and earlier)</td></tr><tr style="height: 21px;"><td style="width: 30.606%; height: 21px;">How much is it annually'</td><td style="width: 34.5023%; height: 21px;"><p>Up to $3,000 per child (ages 6-17)</p><p>Up to $3,600 per child (under age 6)</p></td><td style="width: 34.8916%; height: 21px;">Up to $2,000 per child (ages 0-16)</td></tr><tr style="height: 21px;"><td style="width: 30.606%; height: 21px;">When do I get the money'</td><td style="width: 34.5023%; height: 21px;"><p>Periodically from July to December 2021 (half the credit)</p><p>When you file taxes (the other half)</p></td><td style="width: 34.8916%; height: 21px;">When you file taxes (full credit)</td></tr><tr style="height: 21px;"><td style="width: 30.606%; height: 21px;">Who is a qualifying child'</td><td style="width: 34.5023%; height: 21px;">A dependent with a Social Security number who lives with the taxpayer for more than half the year*</td><td style="width: 34.8916%; height: 21px;">A dependent with a Social Security number who lives with the taxpayer for more than half the year*</td></tr><tr style="height: 21px;"><td style="width: 30.606%; height: 21px;">What are the income limits to get the full credit'</td><td style="width: 34.5023%; height: 21px;"><p>Up to $150,000 married filing jointly</p><p>Up to $112,500 head of household</p></td><td style="width: 34.8916%; height: 21px;"><p>At least $2,500</p><p>Up to $400,000 married filing jointly</p><p>Up to $200,000 for all other filing statuses</p></td></tr><tr style="height: 73px;"><td style="width: 30.606%; height: 73px;">What income can I use'</td><td style="width: 34.5023%; height: 73px;"><p>2020 modified adjusted gross income</p></td><td style="width: 34.8916%; height: 73px;"><p>2020 modified adjusted gross income, or 2019 if higher</p></td></tr><tr style="height: 87px;"><td style="width: 30.606%; height: 87px;">How does it impact my refund'</td><td style="width: 34.5023%; height: 87px;">Half of your credit can be paid in cash periodically; the other half can result in a refund in 2022</td><td style="width: 34.8916%; height: 87px;">You can get up to $1,400 back as a refund</td></tr></tbody></table><p><em>*There are a few more requirements; you can use <a href="https://www.irs.gov/help/ita/does-my-childdependent-qualify-for-the-child-tax-credit-or-the-credit-for-other-dependents" target="_blank" rel="noopener">this tool</a> to find out if a person is a qualifying child.</em></p><p>Since your 2021 tax situation will be different than your 2020 tax situation, you'll need to update the IRS if you want to get all the money you qualify for this year.</p><div><style> #div-gpt-ad-1579713650634-0 > div > iframe { width: 100% !important; min-width: 300px; max-width: 595px; } </style><script async src="https://securepubads.g.doubleclick.net/tag/js/gpt.js"></script><script> window.googletag = window.googletag || { cmd: [] }; googletag.cmd.push(function () { googletag.defineSlot('/1035677/Business_Insider_', [[1, 1], [300, 139], [595, 139], [300, 250], [595, 250], [300, 360], [595, 360], [300, 475], [595, 475]], 'div-gpt-ad-1579713650634-0') .addService(googletag.pubads()); googletag.pubads().enableSingleRequest(); googletag.pubads().setTargeting('category', ["Banking"]).setTargeting('subcat', ["Savings Accounts"]).setTargeting('post_id', []) .setTargeting('post_url', []) .setTargeting('keyword', []) .setTargeting('company-product', []) .setTargeting('post_title', []); googletag.enableServices(); }); </script><!-- /1035677/Business_Insider_ --><div id="div-gpt-ad-1579713650634-0"> <script> googletag.cmd.push(function () { googletag.display('div-gpt-ad-1579713650634-0'); }); </script></div></div><h2>You can share status updates through an online portal</h2><p>Congress agreed that the child tax credit advance payments will be "periodic" from July to December. The Internal Revenue Service said it will be <a href="https://www.businessinsider.com/child-tax-credit-payments-might-not-sent-monthly-irs-says-2021-3" target="_blank" rel="noopener">a challenge to get them out monthly</a>, at least initially, but that's the goal.</p><p>The payments will go to filers who claimed the child tax credit on their 2020 tax returns. But as you say, things have changed since your last tax return was filed and the kids are now with you full-time.</p><p>To get the full amount sent to you this year, you'll have to send the IRS an update on your situation using a soon-to-be-released tool. Otherwise, the payments will be split between you and your former husband since you both claimed the credit for 2020.</p><p>In the next few months, the IRS will debut an online portal where filers like you can submit updates regarding marital status, qualifying children, and incomein short, anything that would change eligibility for the child tax credit for 2021. People who give birth this year, for example, can use the portal to let the IRS know about a new dependent.</p><p>When couples legally separate or divorce, the parent the children are with for the majority of the yearwith exceptions for college and other temporary absencesis deemed the custodial parent for tax purposes (regardless of who is the primary financial provider). Sometimes parents alternate years or agree to split dependents between each other, as you did for 2020.</p><bi-shortcode id="related-article-module" class="mceNonEditable" data-type="60479fbcdaf40c65843d2b23" data-title="All your questions about the child tax credit, answered" data-url="https://www.businessinsider.com/personal-finance/child-tax-credit-stimulus-bill-2021-3" data-thumbnail="https://i.insider.com/undefined">Related Article Module: All your questions about the child tax credit, answered</bi-shortcode><p>At the end of the day, a dependent can only be claimed by one taxpayer per year. If you will be claiming all four children on your 2021 tax return, you should be able to use the portal to let the IRS know.</p><p>In general, you don't need documentation to prove your children are your dependents for the child tax credit, as long as their name and Social Security number match on your tax return, and they only appear on <em>your</em> tax return, not your former husband's as well. Noncustodial parents can claim dependents but they have to get the other parent's consent on Form 8332 and attach it to their tax return.</p><p>The child tax credit portalwhich will also allow you to opt <em>out </em>of the periodic payments and take the money as a lump sum next yearis supposed to be available by July 1. But because of the <a href="https://www.businessinsider.com/personal-finance/federal-tax-deadline-extension-2021-3" target="_blank" rel="noopener">tax deadline extension</a> and a shortage of resources, IRS Commissioner Charles Rettig <a href="https://waysandmeans.house.gov/legislation/hearings/oversight-subcommittee-hearing-irs-commissioner-2021-filing-season" target="_blank" rel="noopener">said during a House hearing on March 18</a> that it may not be up and running by then.</p><p>I don't expect the portal to be flawlesssurely there will be unforeseen challenges and mixups. But this is the first time the IRS is creating a digital tool like this and patience is really our only option.</p><p><em>Tanza Loudenback, CFP</em><em></em><em>, is the personal-finance correspondent at Insider. She writes most frequently about saving money, planning for retirement, taxes, debt management, and strategies for building wealth.</em><em>Have a money question for Tanza'<a href="https://docs.google.com/forms/d/e/1FAIpQLSeNNebnKeyD6_FD5D0DTCPLdR2Puc9vayTmYWQU0Utjk9VoYg/viewform'usp=sf_link" target="_blank" rel="noopener" data-analytics-module="body_link" data-analytics-post-depth="100" data-uri="065a63645ce73cf9875a9134f9e41bfc">Fill out this anonymous form</a>.</em></p><bi-shortcode id="related-content-module" class="mceNonEditable" data-type="more-tax-coverage" data-sheetname="More Tax Coverage">Related Content Module: More Tax Coverage</bi-shortcode><p><a href="https://www.businessinsider.com/personal-finance/how-child-tax-credit-works-for-separated-parents-2021-4#comments">Join the conversation about this story &#187;</a></p>
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