Families who received advance Child Tax Credit payments in 2021 will need to file a 2021 tax return and compare the advance Child Tax Credit payments they received with the amount of the credit they can claim on their 2021 tax return. To help taxpayers reconcile the advance payments, the IRS is sending in January Letter 6419 with the total amount of advance Child Tax Credit payments taxpayers received last year and the number of qualifying children used to calculate the advance payment. Please keep this and any other letter from the IRS about Child Tax Credit payments with your tax records. Those documents will be needed to prepare your 2021 taxes.
Here is a little more about the advance Child Tax Credit payments:
- The American Rescue Plan provided for Child Tax Credit payments of up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17.
- The increased credit phases out for married taxpayers filing jointly with an income over $150,000 ($75,000 for individual filers), with the expanded portion of the credit reducing by $50 for each $1,000 of income over those limits.
- Payments are going to eligible families who filed a 2019 or 2020 federal income tax return. Returns processed by December 1 are reflected in these payments. This includes people who don’t typically file a return but either during 2020 successfully filed a return to register for Economic Impact Payments using the IRS Non-Filers tool on IRS.gov, or in 2021 successfully filed a return by using the Non-filer Sign-up Tool for advance CTC.
- Families who did not get a July, August, September, October or November payment and are getting their first monthly payment this month will still receive their total advance payment amount for the year (which is half of their total Child Tax Credit). This means that the total advance payment amount will be made in one December payment.
Please contact our office if you have any questions.
Kelley Manders, CPA, is a Senior Manager with our Business & Tax Advisory Group. She can be reached at firstname.lastname@example.org.