LETTERS ARE ON THE WAY TO UPDATE PARENTS ON THEIR CHILD TAX CREDIT
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In 2021, Congress changed the child tax credit. The credit altered from $2,000 to upwards of $3,600 per child.
Parents could also receive an advance of half of the credit in the form of a monthly payment. The final payment was delivered in December.
Now, parents are hearing 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 basically letting them know in the letter that's coming to come out that if you did get the advanced credit, you won't get the full amount on the 2021 tax return," Gardner explained.
The IRS started to send letters in December, but won't finish until January. To learn more about the letters, click here.
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IF YOU RECEIVED A CHILD TAX CREDIT PAYMENT, IT'S POSSIBLE YOU OWE SOME OF IT BACK
The money parents received was based on their 2020 taxes. Since it was an advance of their 2021 taxes, it's possible they weren't entitled to some of the money.
"There's not a calculator right now. In fact, the IRS has not officially said how to report it on the 2021 tax return," Gardner explained. "We're waiting on the availability of the worksheets."
Parents may not have to wait for a calculator to determine if they owe money. Gardner said there are a few ways to predict what could be coming.
If you claimed a child in 2020 but not 2021, you could owe money. If your income rose in 2021 compared to 2020, it's also possible you owe money.
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Another way to tell is if you received a monthly payment, but you usually don't get a tax refund.
"If they normally about broke even, or owed a little, they're not going to get that credit, and they may end up possibly owing some taxes when they file their 2021 tax return," Gardner said.
2022 BRINGS AN END TO MONTHLY CHILD TAX CREDIT PAYMENTS
This may be the last tax season parents have to calculate an advanced credit. Congress passed the boosted benefit last year. It was included in President Joe Biden's Build Back Better legislation, but it's stalled in the U.S. Senate.
"Right now, that's the fear we have for now," Gardner said. "We don't know what IRS is going to change in the tax law this year. Of course, we had that Build Back Better provision that didn't get passed through last year."
This means the monthly payments that start midway through 2021 aren't scheduled to take place again in 2022.
Nick Natario has covered all the ways families and individuals can get help during the pandemic. Get updates by follow him Natario on Facebook, Twitter and Instagram.