Consumer Alert: When your kid’s birthday could cost you. Important info about your advance child tax credit

ROCHESTER, N.Y. (WHEC) — Today’s consumer alert concerns those times your kid’s birthday could cost you. All week we’ve been talking about your advance child tax credit.

For most of you watching, the money will be a welcome gift as we all try to slowly recover from financial infirmities caused by COVID. For others, this is a gift that you may want to refuse. I thank you for all your great questions.

This is from a viewer I’ll call Pam. She asked, "When it comes to the tax credit [for] a child that just turned 18, however, lives at home as a dependent. Would single parents making less than 50k be entitled to the child credit for the rest of this year?"

Many of you asked the same question about a child who turns 6 this year. And they’re great questions. Here’s why. The enhanced child credits are based, in part, on your child’s age. If your child is under six, your enhanced credit is $3,600 per child. If your kiddo is 6 to 17 years old, your tax credit is $3,000 per kiddo. And if that kiddo is 18 or a full-time student aged 19 to 24, your tax credit is $500.

Her son’s 18th birthday was in May, so for almost half the year, he was 17. If the IRS considers him 17, Pam gets a $3,000 tax credit and will get half this year. Her monthly payments of $250 would start on July 15, and that’s a huge help to this single mom. But if the IRS says he’s 18, she gets $500 which she’ll collect when she files her 2021 taxes.

I did some digging, and according to the IRS, “a qualifying child is an individual who does not turn 18 before January 1, 2022”.

So that means Pam’s son does not qualify for the enhanced child credit of $3,000. And if your child turned six this year, you get $3,000, not $3,600. But remember, the IRS is basing its advance child tax credit payments on your 2020 tax filing. So I reached out to two of my sources with the IRS. And I asked this question, “If the IRS sends Pam the enhanced child tax credit of $3,000 would she have to pay part of it back come tax time?”

If the IRS paid her half the enhanced child credit this year she’d get $1,500. But she’s actually only eligible for $500. That means the IRS would have overpaid her by a thousand dollars.

My contacts with the IRS sent me a link to a page on the IRS website that did not answer that question.

But an analyst with our friends and CNBC said it’s possible that the IRS could overpay you since they’re basing your child’s eligibility on your last tax return.

And could put you in the unfortunate position of having to pay part of the money back come tax time. The good news is that you can update your information on the IRS web page.