LETTERS ON THE WAY TO UPDATE PARENTS ON THEIR CHILD TAX CREDIT
In 2021, Congress changed the child tax credit. The credit went from $ 2,000 to over $ 3,600 per child.
Parents could also receive an advance of half the credit in the form of a monthly payment. The final payment was made in December.
Now the parents have heard from the IRS again. Tax preparer Edward Gardner said parents should expect a letter from the IRS by the end of January.
“They’re just letting them know in the letter that’s going to come out that if you got the advanced credit, you won’t get the full amount on the 2021 tax return,” Gardner explained.
The IRS started sending letters in December, but won’t end until January. To learn more about letters, Click here.
IF YOU HAVE RECEIVED A CHILD TAX CREDIT PAYMENT, YOU MAY HAVE PART OF IT IN RETURN
The money the parents received was based on their 2020 taxes. As this was an advance on their 2021 taxes, they may not have been entitled to some of the money. .
“There is no calculator right now. In fact, the IRS hasn’t officially said how to report it on the 2021 tax return,” Gardner explained. “We are awaiting the availability of the worksheets.”
Parents may not have to wait for a calculator to determine if they owe money. Gardner said there are several ways to predict what might happen.
If you claimed a child in 2020 but not in 2021, you may owe money. If your income increased in 2021 compared to 2020, it is also possible that you owe money.
Another way to find out is if you’ve received a monthly payment, but usually aren’t getting a tax refund.
“If they’re normally in balance or owe a little, they won’t get that credit, and they could end up owing taxes when they file their 2021 tax return,” Gardner said.
2022 ENDS MONTHLY CHILD TAX CREDIT PAYMENTS
This may be the parents’ last tax period to calculate an advanced credit. Congress passed the augmented advantage last year. It was included in President Joe Biden’s Build Back Better legislation, but it’s stuck in the US Senate.
“Right now, that’s the fear we have at the moment,” Gardner said. “We don’t know what the IRS is going to change in the tax law this year. Of course, we had this Build Back Better provision which was not passed last year.”
This means that monthly payments that start midway through 2021 are not expected to occur again in 2022.
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