Reconcile the Child Tax Credit on Your 2021 Tax Return — Here’s How
For millions of American taxpayers with dependent children in their household, filing federal tax returns in 2021 may be more complicated than usual. You’ll need to have the appropriate information and documentation to show how much you received in advance Child Tax Credit (CTC) payments between July 2021 and December 2021. You’ll also need to know the sum of CTC funds you were entitled to for the year.
For some families, it might be wise to enlist the help of a tax preparation company, or tax accountant, to help ensure you are claiming the right amount of tax credit — or making the right payments if you received excess advance CTC funds.
To reconcile the CTC on your 2021 tax return, filed in the 2022 tax year, you’ll first need to wait for a letter from the IRS, to be sent in January 2022, according to the IRS website.
Letter 6419 will show the total amount of advance credit you received in 2021. Keep this letter with your W-2 form, 1099 forms, and any other paperwork you may need when filing your taxes.
Once you have this letter in hand, you are ready to reconcile the Child Tax Credit as it pertains to your tax return by following these steps:
- Evaluate your gross income for 2021. If it is less than $112,500 for head of household or $150,000 for married couples filing jointly, you are eligible to receive the full CTC for every child ($250 per child for children between the ages of 6 and 17; $300 per child for children under 6).
- Calculate the amount of CTC you are eligible to receive based on the number of children and their ages.
- Review letter 6419 to see if you received the full amount you are eligible for.
If the total amount of CTC you are eligible to receive exceeds the amount of your advance credits, you can claim the balance on your 2021 tax returns. It is a fully refundable tax credit, which means that even if you don’t owe the IRS any money, you can collect the credit.
If the amount of your advance CTC exceeds what you are eligible to return in Child Tax Credits, you may have to repay some or all of the funds, according to the IRS.
Taxpayers making $120,000 or more in 2021 if they are married and filing jointly — and head of households making $100,000 or more — won’t qualify for repayment protection, and will have to pay back any tax credit overpayments previously disbursed to them. You can declare the excess amount as additional income tax for 2021. This amount will decrease the amount of your tax refund — or increase your tax bill for 2022, per the IRS website.
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