That is not accurate.
It is a tax “credit”, thus not taxable. (Similar to the stimulus payments that have been issued since March 2020).
If, however, you have reduced your payroll withholdings to account for the credit, then you will have to repay any excess credit when you file your taxes.
Since the credit increases to $3,000/$3,600 (from $2,000) this year, and advanced payments don’t begin until July, most people will have only a minimal repayment requirement come April 2022.
The refundable amount of this key tax break is slightly higher for the 2024 tax year. Here’s what you need to know.
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Question: Do I have to pay tax on the payments I get?
Answer: No. The payments that you receive are advance payments of the 2021 child tax credit, so they are not taxable. On your 2021 Form 1040 that you file next year, you will reconcile the monthly payments that you receive from the IRS in 2021 with the child tax credit that you are actually entitled to. The IRS will mail out a notice by January 31, 2022, showing the total amount of payments made to you during 2021. You should keep this letter with your tax records to help you fill out your 2021 return next year.