FAQs from the IRS re: Child Tax Credits and Offsets

Many have asked about the right of offset for the recently deposited Child Tax Credits. The IRS has provided several FAQs, with those below specifying past-due funds and garnishments:

Q G2. Will any of my advance Child Tax Credit payments be reduced if I owe taxes from previous years or other federal or state debts? (added June 14, 2021)

A2. No. Advance Child Tax Credit payments will not be reduced (that is, offset) for overdue taxes from previous years or other federal or state debts that you owe. However, if you receive a refund when you file your 2021 tax return, any remaining Child Tax Credit amounts included in your refund may be subject to offset for tax debts or other federal or state debts you owe.

Q G3. Will my advance Child Tax Credit payments be offset if my spouse or I owe past-due child support? (added June 14, 2021)

A3. No.

Q G4. Is my advance Child Tax Credit payment subject to garnishment? (added June 14, 2021)

A4. Yes. Advance Child Tax Credit payments are not exempt from garnishment by non-federal creditors under federal law. Therefore, to the extent permitted by the laws of your state and local government, your advance Child Tax Credit payments may be subject to garnishment by your state, local government, and private creditors, including pursuant to a court order involving a non-federal party (which can include fines related to a crime, administrative court fees, restitution, and other court-ordered debts).

Some states and financial institutions have chosen to act to protect these payments, however, and these payments are still protected from offset by the federal government. For example, if a taxpayer has a judgment against them obtained by a private party but also owes assessed federal taxes, the IRS will not subject the payment to offset with respect to the federal taxes.