By Tami Luhby, CNN
Attention parents: Hold onto that Internal Revenue Service letter about your enhanced child tax credit payments. You’ll need it when you file your 2021 tax return.
The IRS has mailed families Letter 6419, which states how much they received in monthly child tax credit payments from July through December. It also notes the number of kids the agency used to calculate the credit.
That sum generally represents half the amount of the enhanced child tax credit to which families are entitled. They can claim the other half on their 2021 return.
Democrats beefed up the child tax credit to a maximum of $3,600 for each child up to age 6 and $3,000 for each one ages 6 through 17 as part of the American Rescue Plan Act, enacted last March. Parents received up to $300 a month for younger children and $250 for older ones in the second half of last year — the first time the credit was delivered on a monthly basis.
More than 36 million families received monthly payments, which totaled more than $93 billion, according to the IRS.
However, because the monthly payments were based on a family’s income from a prior year, the amount of remaining credit they’ll receive may have to be adjusted if parents’ earnings or the family size changed in 2021. The letter is critical to this reconciliation, which is done on the 2021 tax return.
The full enhanced credit is available for heads of households earning up to $112,500 a year and joint filers making up to $150,000, after which it begins to phase out. For many families, the credit then plateaus at $2,000 per child and starts to phase out for single parents earning more than $200,000 or for married couples with incomes above $400,000.
Prior to the expansion, which was in effect only for 2021, the standard child tax credit was up to $2,000 for each child up to age 17, and parents claimed it annually on their tax returns.
Each spouse in a married couple will receive a letter stating the total of the monthly payments, but parents should not double count the advanced credit on their join return.
Some parents, however, are reporting that the amount listed on the letter does not match the sum that they received.
The agency does not believe this is a widespread problem, Ken Corbin, the IRS’ chief taxpayer experience officer, said during a phone call with reporters Monday.
IRS Commissioner Charles Rettig told reporters that he “is highly confident it is nowhere near millions or hundreds of thousands.”
Some of those affected may have moved or changed their bank account information in December, Corbin said. So their checks may have been returned as undeliverable or their direct deposits were rejected.
If there is a discrepancy, parents should create or log onto their online IRS tax account or the child tax credit portal and check for an updated figure.
“If they have questions about what’s on their letter, the best source of information is on IRS.gov, using the online account,” Corbin said.
Asked what parents should do if the sum listed on the online account also does not match what they received, Corbin said the agency is looking into the issue and will release more information.
A small share of parents reported problems with receiving their monthly payments, particularly in August and September.
Checking the online IRS site
One of Larry Gray’s clients received an IRS letter with an incorrect amount listed for his monthly child tax credit payments.
Gray, a certified public accountant in Rolla, Missouri, and national government liaison for the National Association of Tax Professionals, helped his client set up an online IRS account, which had the correct sum listed. Turns out that the letter did not include the December payment.
“The last thing you want to do right now is have an error on a return,” said Gray, who was contacted by another practitioner whose client’s letter was also one payment short. “If there’s an error and it gets rejected, that goes to manual process and that just piles onto the backlog already there.”
Corbin stressed that taxpayers should make sure to file returns as accurately as possible so no red flags are raised, which could delay processing. The agency is still contending with a backlog of 6 million individual returns from last year.
The IRS’ phone lines will be “jammed up for the foreseeable future,” Rettig told reporters. “The demand is significantly up.”
Although taxpayers could start filing their returns on Monday, parents claiming the enhanced child tax credit will not receive their refund before mid-February, Corbin said. Families should expect to see their refunds in early March.
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