Much like last year, there are some unusual items to keep in mind when filing your 2021 taxes this year. Primarily, the Advanced Child Tax Credit payments may present some challenges for both taxpayers and tax preparing professionals.
The good news is that this time around, the IRS is planning to send special statements to those who received ACTC payments. Keep an eye on your mailboxes and don’t assume a letter marked “Important Tax Document” is just a piece of scam junk mail.
The special statement will have the information necessary to calculate how much of the Child Tax Credit is available for a taxpayer to utilize when they file. If possible, taxpayers should compare the special statement and their bank statements to see if they reconcile. Taxpayers can also review what payments they received via the IRS’s online child tax credit portal.
In the event of a discrepancy, a taxpayer can choose to either use the amount listed in the special statement or rely upon their bank statements. It should be noted, however, that if a taxpayer files their return using an amount different from the special statement the return could be flagged for review and cause a significant delay in the payment of any tax refunds available.
Taxpayers who received the third stimulus payment will also receive a special statement for that payment, so even if you didn’t receive ACTC payments, it’s a good idea to keep an eye on your mailbox.
What is the moral of this story? Keep an eye on your mailboxes and try to calculate the amount of any ATCT payments and third round stimulus payments you received in order to avoid tax season headaches for both yourself and your tax preparer.
NOTICE: This article does not constitute legal advice and no attorney-client relationship has been formed with any individual or entity by its posting. If you have questions about the child tax credit or the advance payments, consult with a tax professional who can tailor their advice to your specific circumstances.
Author: Justin D. Barbour (01/07/2022)
Starting July 15, 2021, the Internal Revenue Service made the first of six-monthly payments for 2021 to approximately 35 million American families. The payment amounts vary depending on a family’s income, the filing status of parents or guardians, as well as the number of eligible children. For example, a family with three qualifying children could […]