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Are advance Child Tax Credit payments taxable

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Question:

Are advance Child Tax Credit payments taxable

Answer:

No, advance Child Tax Credit payments are not taxable.

The legal reasoning behind this conclusion is based on the IRS FAQ, which explicitly states that advance Child Tax Credit payments are not taxable and will not be reported as income on the tax return for the year 2021. These payments are considered advance payments of the Child Tax Credit for the tax year 2021, and thus, they do not constitute taxable income.

Sources:
§ 24. Child tax credit
Publication 971 (12/2021)
Publication 5534-B (06/2021)
IRM Part 21. Customer Account Services. Chapter 6. Individual Tax Returns. Section 3. Credits
Publication 5534 (06/2021)
Publication 4801 (2/2024)

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