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Hawaii News | Kokua Line

Kokua Line: Are the Child Tax Credit payments taxable? Will I have to pay them back?

Question: I did receive the money for my children, which came as a surprise because I hadn’t really been following this. Does this count as income for tax purposes? Is there any chance I will have to pay it back?

Answer: No, advance Child Tax Credit payments, which began July 15 and will continue monthly through December unless a recipient opts out, are not taxable income and won’t be reported as such on 2021 tax returns, according to the Internal Revenue Service.

Your total prepayment will add up to what the IRS estimates as half the Child Tax Credit you’ll claim on your 2021 federal income tax return. The IRS based its estimate on your 2020 or 2019 tax return (the most recent on file) or on information nonfilers submitted online to the IRS.

If you end up receiving more in advance payments than you are allowed to claim come tax time, “you may have to repay the excess amount on your 2021 tax return during the 2022 tax-filing season,” the IRS says on its website.

This could occur, for example, if you claimed two qualifying children on your 2020 tax return but no longer have qualifying children in 2021. The advance Child Tax Credit payments you received for those children would be added to your 2021 income tax “unless you qualify for repayment protection,” the IRS says.

For the purposes of this credit, a qualifying child is a dependent who doesn’t turn 18 before Jan. 1, 2022; lives with the taxpayer for more than half of 2021; is a U.S. citizen, national or resident alien; and meets other requirements.

For more information, including how to qualify for repayment protection or withdraw from the advance payments, see the 2021 FAQs on irs.gov. On the IRS home page, click on the link that says, “Get Details on the Advance Child Tax Credit.”

Q: Regarding the property tax credit, how do we get it if we can’t apply online?

A: You’re referring to Honolulu County’s Real Property Tax Credit for the 2022-2023 tax year, which is accepting applications until Sept. 30, according to the city.

To be clear, the application is available for download as a fillable PDF, at 808ne.ws/taxcred. However, people who download the form will still have to print it out and mail the completed application to the city — you can’t submit it online.

People without internet access or a printer can pick up an application at a satellite city hall or call the Tax Relief Office at 768-3205 to have an application mailed to them, according to the city.

This tax relief is limited to Oahu homeowners who have a home exemption in effect for the property at the time of application and for the subsequent tax year; do not own any other property anywhere (this applies to all titleholders on the property); and whose income does not exceed $60,000 (this applies to the combined income of all titleholders), according to the city.

Q: Does Social Security count as income toward the $60,000 limit?

A: Yes. You must list your gross income, including from Social Security and/or SSI benefits, veterans disability benefits, pensions, wages, interest, dividends and other types of income, which are described on the form.

Q: When they say the vaccine protects you from “severe illness,” what does that mean exactly?

A: “Severe illness means that a person with COVID-19 may need hospitalization, intensive care, a ventilator to help them breathe or they may even die,” according to the U.S. Centers for Disease Control and Prevention.

The CDC says COVID-19 vaccines are effective at preventing severe disease and death even against the highly transmissible delta variant. Fully vaccinated people can be infected, but they tend to suffer no symptoms or only mild illness. Read more at 808ne.ws/cdcnew.


Write to Kokua Line at Honolulu Star-Advertiser, 7 Waterfront Plaza, Suite 210, 500 Ala Moana Blvd., Honolulu 96813; call 529-4773; fax 529-4750; or email kokualine@staradvertiser.com.


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