Child Tax Credit and Stimulus 2021 Recipients: Be on the Lookout for IRS Letter With Tax Filing Info




  • In Business
  • 2021-12-23 18:33:53Z
  • By GOBankingRates
andresr / iStock.
andresr / iStock.  

If you received the advance Child Tax Credit payments this year, keep an eye on your mailbox: The IRS will be sending a letter detailing how to account for the payments on next year's taxes.

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On Dec. 22, the agency announced that it will issue information letters to advance CTC recipients starting this month, and to recipients of the third round of the Economic Impact Payments (aka stimulus checks) at the end of January. The info is designed to reduce errors and delays in processing returns.

The official name of the Child Tax Credit letter is "Letter 6419, 2021 advance CTC." It will be mailed starting in late December and continuing into January. The letter will include the total amount of advance CTC payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. The IRS advises keeping this and any other IRS letters about advance CTC payments with your tax records.

If you received advance payments, you'll need to compare those with the amount of the CTC you can properly claim on your 2021 tax return. You can also check the amount of your payments by using the CTC Update Portal available on IRS.gov.

Eligible families who didn't receive any advance CTC payments in 2021 can still claim the full amount when they file their 2021 tax returns, including families who don't normally need to file returns.

As previously reported by GOBankingRates, CTC payments were determined this year using 2019 or 2020 tax returns. It's possible your income changed since then, and you now surpass the income threshold to receive the CTC. If so, you'll need to note on your 2021 tax return that you have changed income levels and can no longer properly claim the CTC.

Another reason for a status change could be the number and ages of dependents. Payments and their amounts depend on the age of qualifying dependents. For example, if your child outgrew the age of the qualifying amount you were receiving in the past year, you'll need to claim this on your next tax return. This can result in either a reduced payment or a stoppage of payments altogether.

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The IRS also advises that if you received less than the amount that you're eligible for, you could claim a credit for the remaining amount of the CTC on your 2021 tax return. If you received more than the amount you're eligible for, you might need to repay some or all of that excess when you file.

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This article originally appeared on GOBankingRates.com: Child Tax Credit and Stimulus 2021 Recipients: Be on the Lookout for IRS Letter With Tax Filing Info

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