If you have a balance due to the IRS because of excess advance Child Tax Credit payments but cannot afford to make the balance due payment when filing your 2021 tax return, the IRS provides several options to help you manage this debt.
- Payment Plans: You may be eligible for a payment plan, which allows you to pay your tax debt in smaller, more manageable amounts over time. This can be arranged through an installment agreement. You can submit Form 9465, Installment Agreement Request, to the IRS. If your balance is $25,000 or less in combined taxes, interest, and penalties, you may use the Online Payment Agreement (OPA) application to request an installment agreement. Note that the IRS charges a user fee for setting up the installments.
- Partial Payments: If you cannot pay the full amount, you should make the largest possible partial payment with your return by the due date to minimize penalties and interest.
- Repayment Protection: If you qualify for repayment protection, you may not be required to repay some or all of the excess advance Child Tax Credit payments. This protection is available under certain conditions, such as income thresholds and other eligibility criteria.
- Offset of Refunds: If you are due a tax refund but owe other public debts, including past-due federal income tax, the IRS may offset your refund against these debts. You will be notified if your refund has been used to pay these debts.
- Communication with the IRS: It is important to file your tax return even if you cannot pay the amount due to prevent the accrual of additional penalties. The IRS routinely works with taxpayers who owe amounts they cannot afford to pay, and you should contact the IRS to discuss your options.
For more detailed information and to explore your options, you can visit IRS.gov/PaymentPlans.
Sources:
Publication 3007
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