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Winning Back-Office Strategies to Boost Your Business Agility
VIEWpoint Issue 1 | 2023
2023 Compliance Trends: Staying Ahead in an Evolving Regulatory E...
With mid-January upon us, parents across the country may be anticipating their monthly child tax credit (CTC) payment. Unfortunately for over 36 million families, the CTC payments were not extended due to the Build Back Better Act being halted in Congress last month. What parents can expect to receive, however, is a tax letter from the Internal Revenue Service (IRS) essential to preparing their tax returns for 2021, as well as potentially claiming more money due to them.
It is critical for parents to keep this IRS alert (Letter 6410) alongside their tax paperwork to help shorten the wait of any tax refunds owed. Families who received CTC payments must file a 2021 income tax return to collect funds still owed to them.
Many parents may not realize the monthly payments received last year represented only half of the family’s estimated total credit. Letter 6410 will contain the total dollar amount of monthly CTC payments a family received in 2021, as well as the number of qualifying children used to calculate payments. If a family had a baby or adopted a child in 2021, the family would not have received payments for that child.
If you received CTC payments from July 2021 through December 2021, you will need to compare the payments received with what you would have typically earned based on your family situation and 2021 income. Families who received the CTC payments can reference the IRS’ Child Tax Credit Update Portal to confirm the amounts of their payments and what the IRS states was paid in 2021. Compare these amounts with your bank statements for payments around the fifteenth of the month from July through December.
There’s a possibility that more money could be waiting for parents, which is why it’s imperative to file a 2021 Form 1040 (U.S. Individual Income Tax Return) and reconcile amounts already received with what’s owed. Changes in family income could mean some parents are owed more money from the CTC, or none. The IRS stated that low-income families not typically required to file a tax return will need to file a Form 1040 for CTC purposes.
If a family received the CTC and a third stimulus check in early 2021, they will receive two letters in the mail: Letter 6410 and Letter 6475. Letter 6475 specifies how much stimulus money was received in 2021 and if an individual qualifies to claim the Recovery Rebate Credit when filing their 2021 tax return.
With the CTC sunsetting the beginning of the 2021 tax season, there are sure to be questions from parents when filing. Doeren Mayhew’s dedicated individual tax advisors are here to assist in filing your returns with the correct CTC amounts – contact us today.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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