How to Report Schedule 8812 Advance Payments Received

Schedule 8812, “Credits for Qualifying Children and Other Dependents,” had a specific, one-time function for the 2021 tax year. Its purpose was to reconcile the advance Child Tax Credit (CTC) payments that families received with the total credit they were eligible for. These advance payments were a provision of the American Rescue Plan Act, which disbursed half of the estimated 2021 credit in monthly installments.

Because the advance payments were based on older information from a 2019 or 2020 tax return, personal circumstances like income or the number of dependents may have changed. Schedule 8812 was used to compare the advance funds received against the actual, calculated credit for 2021 to determine if they were owed more or needed to repay an excess amount.

Information Needed to Complete Schedule 8812

To complete Schedule 8812 for the 2021 tax year, the primary information needed was the total amount of advance Child Tax Credit payments received. The IRS sent Letter 6419 to communicate this total, and for those who misplaced it, the same information was available through the IRS Online Account portal. When filing a joint return, the amounts from both spouses’ letters had to be combined.

Other required information included your filing status and Adjusted Gross Income (AGI) from your Form 1040. You also needed the personal details for all qualifying children and other dependents claimed on the 2021 return, including their names, dates of birth, and Social Security numbers.

Reconciling Payments on Schedule 8812

The reconciliation on Schedule 8812 began by calculating the full Child Tax Credit a taxpayer was eligible for based on their 2021 income and dependents. For the 2021 tax year, the credit amount was increased to $3,600 for each qualifying child under age 6 and $3,000 for each child ages 6 through 17.

After determining the initial credit, taxpayers applied income limitations. If a filer’s Adjusted Gross Income (AGI) exceeded certain thresholds, the credit was reduced to determine the final eligible amount. This final credit was then compared to the total advance payments received to determine if the taxpayer was owed an additional credit or had to repay an excess amount.

Understanding the Reconciliation Outcome

The result of the Schedule 8812 calculation determined the financial outcome on a taxpayer’s Form 1040. If the eligible credit was more than the advance payments received, the difference was added to the tax refund or used to decrease the tax owed. This was how many families received the remaining half of their credit.

If the advance payments were greater than the eligible credit, the difference was an excess payment that had to be repaid, increasing the total tax due or reducing the refund. This could happen if income increased in 2021 or if a dependent was no longer eligible.

However, repayment protection for the 2021 tax year shielded many lower- and middle-income taxpayers from having to repay this excess amount. Full protection was available for filers with an AGI at or below $40,000 (Single), $50,000 (Head of Household), or $60,000 (Married Filing Jointly). This protection phased out at higher income levels and was not available for those with AGI at or above $80,000, $100,000, and $120,000, respectively.