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The 2021 child tax credit: how it might impact divorced parents

On Behalf of | Oct 5, 2021 | Tax Debt |

If you are a parent, you have no doubt heard about the special child tax credit that Congress passed earlier this year. You may even have started receiving your check already.

The tax credit is providing welcome financial help for many families in Seattle that are struggling with poverty, unemployment or both. But for parents who are divorced or unmarried, figuring out who gets the credit can be complicated.

Who gets to claim the credit?

The simple answer is, the parent who will claim the children as their dependents on their 2021 income tax return is the one who is entitled to claim the tax credit money. Usually, this is the parent who has the kids most of the time under the child custody order. Only one parent gets to claim it, and if one parent incorrectly collects the funds and gets caught by the IRS, they might have to repay the money in their next tax return. If you have already received payments, you can unenroll for the rest of the monthly installments, which are expected to go out once a month for the rest of the year.

In a way, this requires you and your co-parent to predict the future. You may be in the process of changing your child custody arrangement, so you might not know who will have had the lion’s share of custody by the end of 2021. The IRS is encouraging parents who are unsure if they qualify for the credit to unregister for it, though currently, there does not seem to be a way to reapply.

If you have further questions about the child tax credit and if you should claim it, consider consulting your divorce attorney.