Brian Newton, a shareholder and CPA at McGowen, Hurst, Clark & Smith in West Des Moines, Iowa, said the monthly payments were essentially an advance on dollars you would have received in your 2021 tax refund.
“If you had a sizeable refund last year and that was largely attributed to the child tax credit, and you received advanced payments throughout the year, your refund is likely going to be less than it was in prior years,” he said.
Newton said throughout the course of the year, the IRS sent out advance child tax credit payments through the American Rescue Plan.
Amounts varied depending on household income and the age and number of children a family had. Some families could get up to $3,600 annually per child. Those payments were based on information from 2020. If your 2021 tax forms end up showing a significant rise in income or fewer dependents, you may be paying portions or all of your monthly credits back.