During 2021, taxpayers with qualifying children 17 years old and younger received monthly payments of a portion of their Child Tax Credit, unless they opted out. (For more information on the Advance Child Tax Credits that were issued, please read our June article “Many Parents Will Receive an Advance Tax Credit Beginning July 15” on our website.) These advanced amounts need to be reported on your 2021 Individual Income Tax Return. 

 

To facilitate with this filing, the IRS has issued Letter 6419. (For more information on the Letter 6419 and other changes for individual tax filers for 2021 please see our article “Three Changes for Individual Tax Filing in 2022” on our website.)

Unfortunately, this letter may not be as helpful as intended. While the IRS has issued a statement that denies there are widespread inaccuracies in the letters they released in December, they have admitted that there may be a “small affected group”. The IRS letters were distributed on December 14, 2021, while the final payment was given to families the following day, causing some letters to not reflect the final payment of the year.

 

To rectify this, we are urging all qualifying taxpayers to compare their letter to their bank statements from the year to ensure that they are giving tax preparers the correct information. As the IRS is extremely back logged already, we are anticipating slower processing times at the Federal level. Any incorrect amounts will only exacerbate the delay.

 

You can also review the amounts you were given by logging into your IRS Online Account. This may be more time consuming than checking bank statements, but it is an option. Details about this process can be found on the IRS website in the Fact Sheet issued January 22, 2022: Key things to look for when receiving an IRS letter; Check Online Account if uncertain about amounts. The IRS has stated that the full totals given for the Advance Child Tax Credit will not be reflected in these accounts until January 31, 2022.

 

If you have any questions, please don’t hesitate to contact your Faw Casson advisor.