by: Charlestien Harris
Tax time can be stressful for taxpayers, especially when it comes to keeping up with important tax documents. Adding to that stress are new tax documents hitting our mailboxes related to federal pandemic support. We’ll cover a big one today that impacts a lot of American families.
In 2021, many families utilized the advance Child Tax Credit (CTC) payments, where half the total credit amount was paid in advance monthly payments. These payments assisted families who faced financial barriers during the pandemic. Payments started in the summer of 2021, with the first payment issued on July 15, 2021.
To help taxpayers figure out how to file for the 2021 Child Tax Credit, the IRS sent out Letter 6419 (Advance Child Tax Credit Reconciliation) beginning in late December 2021 through January 2022. Taxpayers should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records. If you have not received your letter, you should contact the IRS at www.irs.gov. However, staffing shortages within the agency may delay an immediate response, so be patient.
Families who received advance payments must file a 2021 tax return and compare the advance payments received in 2021 with the CTC amount they can claim for 2021. If you received monthly CTC payments this past year, you should receive this letter from the IRS in January. If you filed as married filing jointly on your prior-year tax return, then both you and your spouse will receive a Letter 6419.
FAQ #1: Why did I receive this letter?
Under the American Rescue Plan, the IRS made monthly Advanced CTC payments as part of your 2021 Child Tax Credit from July through December to help support families raising children. If you are eligible for the credit, file Schedule 8812 with your 2021 income tax return to claim your remaining credit (for a total amount of up to $3,600 per child under age 6 and $3,000 per child age 6 through 17). If you aren’t eligible for the credit, file Schedule 8812 to determine if you must pay back some or all the monthly payments you received in 2021 and if you qualify for repayment protection.
FAQ #2: How does the IRS determine your payment amounts?
In most instances, the monthly payment amounts were based on an income tax return filed or the information entered in the IRS non-filer sign-up tool in 2020 or 2021. Payment information may have changed based on the information provided to the IRS through your 2020 income tax return. Use the Child Tax Credit Update Portal, or the dedicated IRS Child Tax Credit phone line, if the IRS processed it after June.
You should review each monthly payment, including any changes, at www.irs.gov/credits-deductions/child-tax-credit-update-portal, and select “Manage Advance Payments.” If you did not receive one or more payments, contact the IRS at 800-908-4184 before filing your return. This is a critical step to ensure that your Advance Child Tax Credit payments are calculated correctly. For more information about this topic and other financial topics, email me at Charlestien.firstname.lastname@example.org or call me at 662-624-5776. Until next week, stay financially fit.