When you’re delinquent on child support, your tax refund is typically intercepted and sent to the appropriate child support agency through the Treasury Offset Program. The same rules applied to the first round of stimulus checks in 2020.
But what about the advance child tax credits of $300 a month for parents of children younger than 6 and $250 a month for kids ages 6 to 17? Here’s what you need to know, whether you’re a parent who owes child support or your child’s other parent is delinquent.
Will the IRS Offset Advanced Child Credits if I Owe Child Support?
The parent who can claim a child as a dependent on their tax returns, meaning they provide more than half of their support, is the parent who will receive the child credits. So it’s unlikely that you’d qualify for the credit on behalf of any child you’re behind on support payments for.
But if you have other children who qualify as your dependents and you’re otherwise eligible, you’ll still get the advance $300 monthly child tax credits, even if you’re behind on child support. The IRS won’t offset the advance payments for any reason, including child support debt.
However, the advance payments are only half of the expanded credit for 2021. The total credit is $3,600 for children 6 and younger, and $3,000 for children 6 to 17. The remaining half will be paid as a refund when you file a tax return next year.
The other half of the credit, along with the rest of your refund, can be seized to offset child support as usual next year at tax time.
This is essentially how things worked with the second and third stimulus checks. Neither payment was offset for debt of any kind, including unpaid child support. But people who qualified for the payment and didn’t receive it had to file a 2020 tax return. They got their payments with their tax refund as a Recovery Rebate Credit. But if they had unpaid child support or back taxes, the credit was seized along with the rest of their refund.
Can I Get My Ex’s Child Credits if They Owe Me Child Support?
If you’re the parent who provides more than half of the child’s support, you’ll receive the credits, not your ex. However, if your ex qualifies for $250 or $300 a month because they have other children, they’ll still receive that money even if they owe you child support.
If you usually receive their tax refund through the Treasury Offset Program, you may receive the other half of their child tax credits with the rest of their refund next year.
What if My Spouse Owes Child Support?
Since the advance credits won’t be garnished for child support, your monthly payments shouldn’t be affected. However, if you and your spouse file a joint return, you should file an injured spouse claim using Form 8379 when you submit your 2021 return. Doing so protects your half of the remaining credit from being offset.
Can the Credits Be Garnished for Other Debt?
The advance part of the credit can’t be offset for money you owe the federal government. If you owe back taxes, your monthly payments won’t be reduced.
But the law doesn’t prevent non-federal creditors from going after the advance credits. So if you owe state or local taxes or if a private creditor has a garnishment order against you, your child credits could be seized. Some states and financial institutions have opted to protect advance child credit payments from garnishment.
The half of the credit that’s payable as a refund can still be offset if you owe the federal government money.
When Will the Child Credits Arrive?
The first advance child credits are scheduled for July 15. They’ll continue on a monthly basis through December.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]