Child Tax Credit Recipients: How To Prepare Your Taxes for 2022 According to IRS Guidelines

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If you have been a recipient of money in 2021 as part of the advance Child Tax Credit (CTC) payments, you could face a tax bill next year if you do not claim the credit and your income correctly.

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For those who do not pay taxes and/or do not make enough money to pay taxes, this will likely not apply to you, and you will not have to do anything further for either this year or next year’s taxes.

The IRS states that if you received advance payments in 2021, you will need to compare them with the amount of CTC payments that you will be eligible to claim on your 2021 tax return before you file. This means that if circumstances — such as income or number of dependents — have changed from the time you claimed the CTC to next year, you might have to pay the money you’ve received back.

CTC payments were determined this year using 2019 or 2020 tax returns (again, for those who pay taxes).  During the 2-3 year timespan between then and next year at tax time, however, it’s possible that your income may have changed, and that you now surpass the income threshold to receive the CTC. In this case, you will need to claim on your 2021 tax return that you have changed income levels and can no longer properly claim the CTC.

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Related: 1 in 10 Eligible Families Did Not Receive Child Tax Credit Payments

Another reason for 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 will need to claim this on your next tax return. This can result in either a reduced payment, or stopping of payments altogether.

The IRS also advises that if you received less than the amount that you’re eligible for, you’ll claim a credit for the remaining amount of the Child Tax Credit on your 2021 tax return. If you received more than the amount you’re eligible for, as in the event of surpassing income thresholds or age qualifications, you may need to repay some or all of that excess when you file.

See: Child Tax Credit for 2022 — Here’s How Some Families May Get $7,200 Next Year
Find: Child Tax Credit Payment Schedule For 2021 – Here’s When You’ll Get Your Money

In January of 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payment that you received in 2021. You will need to keep this and any other IRS letter you receive about advance CTC payments with your tax records and refer to them when you file.

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About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 

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