Best tips for the Child Tax Credit, and filing your 2021 tax return
For those who receive the advance Child Tax Credit payments, in order to get the remainder of the tax credit for which you are eligible, you must file your 2021 tax return.
Read advance CTC letter 6419 very carefully: IRS has sent letters, (“2021 Total Advance Child Tax Credit (Adv CTC) Payments”) to those who receive payments, in order to help ensure that returns filed are done so accurately. By using your official IRS numbers which are located in the IRS system, you can avoid often costly delays. To find this information, you may log onto your IRS account online.
Get your total payment amount: To ensure accurate completion of the 2021 tax return, use the Advance Child Tax Credit information included in your IRS account beginning January 31st. If ever you are in doubt about the amount, it’s always best to check your IRS account online.
Be careful, file an accurate return: If you are one of those taxpayers who file your tax return every year electronically. With direct deposit, then you will generally see your refund within 21 days, after the IRS accepts the filing. Those who do file should carefully put records together to ensure that their tax returns are being filed correctly. Incorrect entries in your tax return will mean that the IRS will further review your return, which of course will cause a delay. Incorrect entries could also lead to a rejected tax return, causing further delays.
Tips for those who moved in December or changed bank accounts: There is a limited group of taxpayers who may receive an IRS letter stating an incorrect amount of payments received. Of those, in this small group of taxpayers who are affected, they may generally involve people who moved or changed bank accounts in December of 2021, and those checks were returned as undeliverable, or their direct deposits were rejected. The IRS encourages anyone who thinks the letter might not be accurate, simply rely on the amount of payments reflected on the IRS account online.
Caution for Married Filing Joint Couples: Letters sent to taxpayers who filed as Married Filing Joint are being sent to each spouse separately, included with only their half of the payments received. This means that married taxpayers will receive a letter but will need to combine the information from the letters in the couple’s joint return. If the advance payments sum/ total differs between the Letter 6419, and their IRS Online Account, then the taxpayer should rely on the information shown in the online account.
Reporting advance payments on your 2021 tax return:
If a taxpayer receives an advance payment on the Child Tax Credit, they then need to reconcile the total amount received in 2021, versus the eligible amount to claim on their return.
- “Reconciling” the advance Child Tax Credit payments include:
- Comparing the total of the advance Child Tax payments, which were received during 2021 (even is amount = $0) with-
- The full amount of the Child Tax Credit, which would be properly claimed on their 2021 tax return.
To reconcile – or compare get advance payments total and number of qualifying children in your IRS online Account. Taxpayers may also refer to Letter 6419.
- What if Letter 6419 has a different advance payment total than expected? For most taxpayers, the advance payments total in Letter 6419 will match the total in their IRS Online Account. If the amount listed in their Online Account is different from the letter, taxpayers should then rely on the amount in the Online Account. The IRS Online Account has the most current advance payment information. However, CAUTION : Do not rely solely on the Child Tax Credit Update Portal or Tax Transcripts for the advance payments total; this information may very well be completely outdated.
- Enter the information on Schedule 8812 of the Form 1040.
What if Letter 6419 has a different advance payment total than expected?
For most taxpayers, the advance payments total in Letter 6419 will match the total in their IRS Online Account.
If the advance payment total differs between the Letter 6419 and their IRS Online Account, you should always rely on the total that is found in the IRS Online Account. That is the information that the IRS has on file. Submitting a different amount on the tax return could possibly cause further IRS review which of course would mean an additional delay.
The IRS Online Account has the most current advance payment information.
However, CAUTION: Do not rely solely on the Child Tax Credit Update Portal or Tax Transcripts for the advance payments total; this information may very well be completely outdated.
Hopefully this article helped you learn more about the Child Tax Credit, and how to file your 2021 tax return. Much of our information was taken from the IRS website, which is a great resource for further information. However, if you do still have questions about your best tax solutions, feel free to contact My CFO Portal today!
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