Reconciliation of credit and advance credit

(A) In general If the aggregate amount of payments under section 7527A to the taxpayer during the taxable year exceeds the amount of the credit allowed under this section to such taxpayer for such taxable year (determined without regard to paragraph (1)), the tax imposed by this chapter for such taxable year shall be increased by the amount of such excess. Any failure to so increase the tax shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).

(B) Safe harbor based on modified adjusted gross income (i) In general In the case of a taxpayer whose modified adjusted gross income (as defined in subsection (b)) for the taxable year does not exceed 200 percent of the applicable income threshold, the amount of the increase determined under subparagraph (A) with respect to such taxpayer for such taxable year shall be reduced (but not below zero) by the safe harbor amount. (ii) Phase out of safe harbor amount In the case of a taxpayer whose modified adjusted gross income (as defined in subsection (b)) for the taxable year exceeds the applicable income threshold, the safe harbor amount otherwise in effect under clause (i) shall be reduced by the amount which bears the same ratio to such amount as such excess bears to the applicable income threshold. (iii) Applicable income threshold For purposes of this subparagraph, the term “applicable income threshold” means— (I) $60,000 in the case of a joint return or surviving spouse (as defined in section 2(a)), (II) $50,000 in the case of a head of household, and (III) $40,000 in any other case. (iv) Safe harbor amount For purposes of this subparagraph, the term “safe harbor amount” means, with respect to any taxable year, the product of— (I) $2,000, multiplied by (II) the excess (if any) of the number of qualified children taken into account in determining the annual advance amount with respect to the taxpayer under section 7527A with respect to months beginning in such taxable year, over the number of qualified children taken into account in determining the credit allowed under this section for such taxable year.