ELIGIBLE Americans scoring Child Tax Credit checks should consider that the extra cash of up to $3,600 per child will affect next year’s taxes.
This January, the Internal Revenue Service (IRS) will be sending what they’re calling Letter 6419s to families to calculate the money they received and what amounts might be owed due to overpayments.
The letter will calculate the “total amount of advance Child Tax Credit payments that were disbursed to you during 2021,” the IRS states.
PAY NOW, NOT LATER
The CTC checks started landing in Americans’ bank accounts and mailboxes in July and are expected to continue through December.
Most American families are learning they are eligible for the full $300 per month for every child five and under.
Others are getting $250 per month for every child six to 17.
The IRS is relying on the most recent tax filings, most commonly the 2019 or 2020 tax returns to verify if the family qualifies for CTC credits.
If a family’s financial or status changed in 2021 that means your eligibility to receive the credits did too.
KEEP IRS INFORMED
For instance, if your family welcomed another child to the family or you were married – this could factor into your payments.
When moving to a new address, it’s key to inform the IRS on its website or by phone and also inform the US Postal Service’s Change-of-Address form.
If you were given a raise in pay or your child became an adult and turned 18 – these could all cause your family’s CTC amount to be less than what you received, CNET reports.
A handy way to offset having to pay back the feds for this money is to keep your family’s information updated.
Read our Child tax credit live blog for the very latest news and updates…
The IRS offers ways to update any “change of circumstances” on their CTC update portal.
OPT-OUT IS SAFEST OPTION
The critical point, any cash you accept while possibly being ineligible, the IRS will be coming back to reclaim those funds next tax season.
“This means that by accepting advance child tax credit payments, the amount of your refund may be reduced or the amount of tax you owe may increase,” according to the IRS.
The best course of action is to opt out of advance payments and collect the lump sum next year.
Source: The Sun