Child Tax Credit 2022
The money allocated by the American Rescue Plan for the child tax credit for 2021 has still not ended. Though monthly payments are no longer being wired monthly, Americans should expect one last payment when they file their taxes in the form of a tax refund.
The amounts received vary by household income and will depend on the number of dependent children there. A family with children under 6 should expect up to $1,800 per child, and families with children aged 6–17 should expect up to $1,500 per child. These totals reflect the fact that the families opted to receive half of the total allocations, $3,600 and $3,000, respectively, in monthly payments from July to December. If the families did not receive the first half of the money in monthly payments, they will receive the total in their tax refunds.
There is no limit to the number of eligible children, but you should let the IRS know if you have had a child or added a child to the number of dependents in your household in the last year. Your refund will reflect the number of dependent children from your previous tax filings and not your current one. If this is the case, you will receive up to $3,600 or $3,000 (depending on their age) for that child.
Receiving Your Refund
In order to receive your refund and avoid any unnecessary delays, you should keep track of Letter 6419 sent by the IRS. This letter confirms the total amounts received by parents in 2021, the number of eligible children used to calculate the total amount, and how much remains to be paid. The letters were sent out in December, though many are still in transit. If you know that you received the tax credits but have not gotten your letter, register on the IRS website, which will have all of your information. You should make sure that your totals check out. If there are discrepancies, advise the IRS when you file your taxes or, otherwise, update your information on the IRS website where you can set up an account to do precisely that. The information is likely to have been different if you have recently moved, married, or experienced a significant change in income.
Monthly Payments and Their Effect on 2021 Tax Refund
There are various ways in which your monthly childcare tax credit payments could affect your tax refunds:
- If you received money for something you didn’t qualify for the tax credits, you will have to pay this back.
- Similar to the above, if the IRS overpaid you, you will have to return these funds.
- If your income changed, and this change was not reported, the change would alter the amount awarded.
- If one of your children turned 18 and you were awarded tax credits, this money may have to be paid back.
- As mentioned earlier, if you opted out of monthly payments in 2021, the money will be awarded in your 2021 tax refunds.
Dale Solution Miami understands the tremendously fraught and complex tax situation that the pandemic and its responses have caused. Don’t hesitate to contact a Dale Solution accountant if you have further questions regarding your tax situation.