Filing 2021 taxes will look slightly different for families who received the enhanced child tax credit last year.
That’s because the monthly payments that were sent to millions of families with eligible children from July to December only accounted for half of the credit. Now, those who got the money need to show what they received to make sure they get the second half in their 2021 tax refund.
The IRS has begun sending letters to families that show the total amount of advance payments they received. The agency will continue to send out the form, called Letter 6419, to families through the end of January.
More from Invest in You:
The ‘Great Resignation’ is being led by low-wage and minority workers
Why 26% of Americans expect their financial situation to be worse in 2022
How these entrepreneurs reinvented themselves after quitting their jobs
“That amount is going to be needed to be reconciled on their 2021 tax return,” said Sheri Fronsee, a CPA and tax researcher specialist with the National Association of Tax Professionals.
Reconciling at tax time
Families should hold onto the letter and use it to correctly reconcile the child tax credit when they file their 2021 taxes. The information will be helpful in filling out Schedule 8812 (along with Form 1040) which will determine how much more money they get from the credit.
“If you don’t make that reconciliation, they’re going to hold your refund until you do that,” said Fronsee. “You don’t want that to happen — make sure that reconciliation is done.”
If you don’t receive the letter, there are other ways to make sure you have the correct information to file your taxes properly. Families can also check how much they’ve received through the advanced child tax credit payments using the IRS CTC update portal.