How does a taxpayer’s custody situation affect their advance child tax credit payments?

The Advance Child Tax Credit payments were based on the IRS records from the most recent tax return on file. This means the parent who claimed the child last year may have received the monthly advance payments, even if the child now lives with the other parent.

The IRS does not decide advance payments based on who has custody right now, but based on who claimed the child on the prior year’s return.

If custody changes, the payments may still go to the wrong parent

Even if the child lives with a different parent this year, the IRS still sends payments based on last year’s return unless someone updates the information.

This leads to:

• wrong parent receiving payments
• eligible parent receiving nothing
• possible repayment at tax time

Who is actually eligible?

The parent eligible for the Child Tax Credit this year is the parent who:

• has custody for more than half the year, and
• claims the child on the tax return for the current tax year

That parent gets the credit, not necessarily the one who received the advance payments.

What if parents alternate years?

Some custody agreements allow alternating tax years. In that case:

• the parent claiming the child on the current return is eligible
• but advance payments may go to the parent who claimed last year

It creates confusion and repayment issues.

Will the wrong parent have to repay the money?

Possibly.
If a parent received advance payments but does not claim the child this year, they may have to repay some or all of them unless they qualify for repayment protection based on income.

Can the IRS switch payments?

Not automatically.
Parents cannot transfer advance payments using a custody agreement. The IRS only applies credits based on tax law and dependency rules.

The IRS portal can update custody

When Advance CTC was active, parents could update:

• dependents
• custody changes
• income
• bank information

Future advance credits may use the same system.

Custody affects eligibility, but advance payments are based on the prior year’s return. That means:

• custody changes
• alternating years
• new dependents

can all cause incorrect advance payments and repayment at filing time.