Advance Child Tax Credit & Your 2021 Tax Return
Updated: Jan 19
With the new year comes yet another tax season! As you gather your 2021 tax information, be on the lookout for correspondence from the IRS. If you received advance payments of the child tax credit during 2021, you should receive a letter that will help simplify your tax return and maximize any remaining amount owed to you. Read on for more information.
The American Rescue Plan Act (ARPA) of 2021 revised and expanded the child tax credit for the 2021 tax year, increasing the maximum credit amount and authorizing the advance disbursement of 50% of the credit to eligible families in the form of monthly payments from the IRS.
Under ARPA, the maximum credit amount for 2021 increased to $3,000 per eligible child under age 18, with an additional $600 for children under 6. From July 2021 to December 2021, the IRS disbursed advance payments to eligible families of up to $250/month per child age 6 to 17 and $300/month for each child under 6.
Families who received advance child tax credit payments may claim their remaining credit (up to $1,800 per child) on their 2021 tax return. Recipients of the advance payments began receiving IRS Letter 6419 in late December 2021; this correspondence should reach all recipients by the end of January 2022.
Letter 6419 details the total amount of advance child tax credit payments received by the taxpayer during 2021, as well as the number of qualifying children used to calculate the payment amounts.
If you receive Letter 6419 or other correspondence from the IRS, hold on to it; the information contained within will be required to prepare your 2021 tax return.
Be sure to include the letter among the tax-related documents provided to your CPA; this will help simplify the process of completing your tax return and ensure that you receive the full amount of any remaining child tax credit you may be owed.
If your family received advance child tax credit payments during 2021, you may also use the IRS’s online Child Tax Credit Update Portal to review the amount of advance payments you received during the tax year.
Eligible families who did not receive any advance payments in 2021 may claim the full amount of their allowed child tax credit on their 2021 tax return using Schedule 8812.
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