Beginning Thursday July 15, 2021 parents will begin receiving the Child Tax Credit under the American Rescue Plan.  Under this plan the pro-rated monthly amount of the yearly tax deduction will be automatically sent to one parent every month.  The payments made are in advance of the 2021 tax year.  As noted on the "What you need to know" link, the parent receiving the payment may not be the parent entitled to the tax deduction for the year 2021.  It appears that the child tax credit will be based upon the income of the parent last receiving the deduction.

These payments are automatic unless the parents opt out at www.irs.gov.  There is little to no guidance on this issue and the amount may require repayment when a parent files taxes in 2022.

For example:

According to the child support order Father is entitled to the tax deduction in 2021.

Mother could receive the monthly Child Tax Credit beginning July 15, 2021.  Those monthly payments will count towards Father's tax deduction in 2021.  The monthly payments will be based on Mother's income for either 2019 or 2020.

For the tax year 2021 Father would only be able to claim 6 months of the tax deduction when he files his taxes beginning in January 2022.

Parents are advised that they must follow the orders of the court regarding which parent is entitled to claim the child deduction.  

The order of the court regarding tax deductions is found on page 3, paragraph 10 of the child support order entitled Tax Deductions.

The Family Law Bench of Yavapai County urges parents and counsel to review their child support orders to ensure compliance with the orders of the court.  If you are currently involved in a family law case, please consult the other parent or counsel if represented to determine if the parents can reach agreement regarding this issue. | What you need to know

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