Correctly reconcile your advance Child Tax Credit for a faster refund
Making a mistake reporting your advance Child Tax Credit will increase the time it takes the IRS to process your return and delay your refund.
Some taxpayers have been making mistakes entering their advance Child Tax Credit when filing their tax returns due to various reasons.
Couples filing married jointly have made the mistake of entering the wrong amount of advance Child Tax Credit on their tax return. The IRS sends a Letter 6419 to both the husband and wife. The amounts from both letters must be entered on a joint return. Don’t make the mistake of only including the amount from one letter.
A recent separation or divorce can also cause complications. If the couple is no longer filing married filing jointly, only one of the parents can claim a child. The credit can become more complex since both received the advance, but one parent may not be able to claim a child. Some people are making the mistake of thinking that they aren’t required to enter the advance on their return if they gave the amount of their credit to the other spouse.
You must report the amount of the advance reported on your Letter 6419 even if you gave your advance to the other spouse. The IRS will correct the advance according to the amount reported on Letter 6419.
Some people can’t find their Letter 6419 and incorrectly calculate the amount of their advance. If you can’t find Letter 6419, you can use the IRS’s Child Tax Credit Update Portal or your IRS Online Account. If you are a new user, you must create an account.
The IRS will not automatically figure the Child Tax Credit for you on your 2021 tax return. Use IRS Schedule 8812 to claim the Child Tax Credit.
If you make a mistake when determining the amount of your Child Tax Credit on your 2021 tax return, the IRS will automatically fix that amount and correct your return. However, the correction will increase the time it takes to process your return and delay your refund.
The IRS will send you a letter explaining any change to the amount of Child Tax Credit that you claimed. If you have any questions about the change, call the number on the upper right side of the letter.
If the total amount of your advance Child Tax Credit is greater than the amount you are entitled to claim on your 2021 tax return, you may need to report the entire excess amount on your return. However, if you are eligible for repayment protection, you will not be required to repay some or all of your excess advance Child Tax Credit.
The full repayment protection amount is $2,000 multiplied by the following:
The number of qualifying children that the IRS took into account in determining the IRS’s initial estimate of your advance If the amount of the advance Child Tax Credit is less than the amount of your Child Tax Credit payments.
The number of qualifying children taken into account in determining the amount of Child Tax Credit that you can properly claim on your 2021 tax return.
The amount of the repayment protection will be reduced or phased out based on your modified Adjusted Gross Income.
David Zubler is a tax accountant and Enrolled Agent in East Tennessee, providing tax strategies and representing clients before the IRS and has over 25 years of tax experience. He is the author of six tax books and has shared tax advice on national TV. He is the founder and president of Your Tax Care. The company provides business and tax education, including David’s one-minute tax tip radio recordings at YourTaxCare.com. David can be reached at (865) 363-3019 or contacted by email at firstname.lastname@example.org.