If you are the person claiming your child for tax year 2021, then you are entitled to the full Child Tax Credit money for your family. You will report that you received $0 of it, and claim the full amount you are owed as part of your 2021 tax refund.
What about the other person? The person who received those payments in 2021 should have opted out of them, since they were not the person caring for the child for 2021. Some people will have to repay that money, but others can actually just keep it because of something called “Repayment Protection”. If the person who claimed the money lived in the US for more than half of 2021 and their modified gross income (AGI) for 2021 was at or below the following amount, they can keep the full amount:
• $60,000 MFJ or Qualifying Widow(er);
• $50,000 HOH; and
• $40,000 Single or MFS
Repayment protection is phased out as modified AGI exceeds the amounts above. Repayment protection will equal $0 and the repayment amount will not be reduced when modified AGI is at or above this higher amount based on the filing status for 2021:
• $120,000 MFJ or Qualifying Widow(er);
• $100,000 HOH; or
• $80,000 Single or MFS
Here's more information from the IRS about this policy, and info about claiming this money when you are sharing custody.
