EIP3 and Advance Child Tax Credit Payments - MFJ to MFS

[dixontaxvt]

Hello community,

I have a client, 2021 was MFJ with two kids. This year, for personal reasons they are insistent on filing MFS, husband will claim the children as dependents.

Collectively, they received $3,000 in Advance CTC; they each received a 6419 for $1,500. Is husband going to be able to indicate on his return that they received $3,000 CTC, or do they each have to indicate they received $1,500 on their own separate returns, creating an overpayment situation for wife.

Similarly, the EIP3 letters were split down the middle as well: $2,800 on each of their letters since they received $5,600 as a family of four. I am aware that in the case of separated parents, if a parent got a check for a child because of 2020 dependency status and for 2021 the other parent claims a RRC, that this okay and the funds do not have to be repaid. However, since they are married, I'm not sure how this will work - again, can I allocate both of the children's EIP3 to the husband's return and only $1,400 to the wife, even though her letter shows $2,800?

Looking for any advice or web resources. Thanks!

[dkh]

You report each taxpayers money from the 6419 and 6475 letters on their return just as the letter shows. 

No adding together. No splitting differently.

[qbteachmt]

"Looking for any advice or web resources."

Are you signed up for IRS e-newsletters, which will then come to your email directly? This came out yesterday:

https://www.irs.gov/newsroom/tips-for-parents-who-share-custody-or-alternate-tax-benefits

[dixontaxvt]

Thank you both for your responses.

My follow-up is this: to my understanding, a.) my client not claiming the children will not be required to repay EIP3, while her spouse can still claim a Recovery for one child and b.) my client will be protected from repaying her portion of the CTC because of her AGI being below $40,000, but her husband can still claim the entire amount for both children on his return.

Am I missing something here? I don't remember it being discussed in CPE that clients would want to do MFS so they could effectively "double dip" on CTC and EIP3. Something seems wrong.

[qbteachmt]

For the $1,400 each, this is what I have seen: Three letters. One is Joint for MFJ and has the total. One is to each party and has their share. So I would think splitting it differently just to see if they can get more money might result in holding up the return or getting it adjusted by the IRS, since the Joint letter shows enough was paid that covers everyone. That doesn't mean it won't work.

"Something seems wrong."

Did you read that recent link?

"so they could effectively "double dip" on CTC and EIP3"

Our tax dollars at work.

[DavidC1]

Similar situation however my clients are divorced and alternate the dependent, my client received advanced child tax credit as well as the 3rd EIP for the child.  I do both the parents taxes, is the other parent claiming the child this year entitled the whole CTC and the 3rd EIP for the child? Also, will saying the taxpayer who received advanced child tax credit without a dependent on his tax return flag him for receiving it?

[qbteachmt]

Just fill in the forms and the program does the work.

If you want to know how the sausage is made, follow the IRS link that is provided above and read about all of it.