Child Tax Credit Guidance Updated by IRS

Dad working on taxes.
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Tax season already promises to be interesting this year for parents — and their accountants — calculating tax returns in light of the advance child tax credit. On Jan. 12, 2022, the IRS updated the FAQ page for the advance CTC to give taxpayers and tax preparers additional guidance.

See: Stimulus Update: How To Request an IRS Trace for Lost Child Tax Credit Payment
Find: Stimulus Update: What COVID-Era Programs Will Continue in 2022?

As of the 2022 tax season, the CTC is not taxable. However, parents must reconcile the amount they received with the amount they were supposed to receive based on their 2021 adjusted gross income.  

“Those that received less than the amount they are eligible for can claim a credit for the remaining amount. Those that received more than they are eligible for may need to repay some or all of the excess amount,” the IRS stated in a press release announcing the updated FAQ. 

The FAQ clarified a few key points that taxpayers may not have understood. Notably:

  • The child tax credits are not taxable and are not reported as income on your 2021 tax return.
  • You must reconcile your advance payments with the amount of the credit your are eligible to receive on your 2021 income tax return — or your tax return processing could be delayed.
  • The IRS contacted recipients of the advance CTC in June 2021, before they were disbursed.
  • Payments were distributed monthly between July 15, 2021 and Dec. 2021.
  • The IRS sent, or is sending, Letter 6419 to let taxpayers know the total amount of advance CTC payments made throughout 2021.
  • Advance child tax credit payments are not counted as income and will not affect eligibility for government benefits or assistance.
Make Your Money Work

Learn: Child Tax Credit: I Received Money, But Don’t Usually Submit a Return — Do I Need to File Taxes This Year?
Explore: Tax Surprise! If You Received COVID Benefits, You Could See No Refund — or Even a Bill

The updates to the FAQ page also explained the amount families were eligible to receive through the advance CTC program, how they were able to opt out of receiving advance credits, and how to reconcile their payments on their tax returns.

The FAQ emphasized that IRS phone assistors “don’t have information beyond what’s available on IRS.gov” and to rely on the website for further details.

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About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

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