In their ongoing efforts this season to better assist tax professionals and as a follow-up to an earlier communication, Partner Support is sharing yesterday’s updated Child Tax Credit and Advance Child Tax Credit Fact Sheet.
New for 2022, these IRS Fact Sheets are an excellent one-stop document containing the most frequently asked questions (FAQs) organized by topic, plus additional information and links to related resources. The IRS keeps them updated often so that you have the latest information as you prepare TY2021 returns for your clients.
We continue to encourage our partners to review these FAQs and to follow the instructions and guidance presented by the IRS as applicable.
Fact Sheet FS-2022-07, February 1, 2022
- This Fact Sheet updates the 2021 Child Tax Credit and Advance Child Tax Credit frequently asked questions (FAQs). These updates are to help eligible families properly claim the credit when they prepare and file their 2021 tax return.
One of the top questions we’re receiving is regarding qualifications for “forgiveness” of excess Advance Child Tax Payments received in 2021, officially entitled – Repayment Protection. This topic is covered in this latest Fact Sheet – refer to the following FAQs:
- (Q) H3: Will I need to repay advance Child Tax Credit payments back to the IRS if they were greater than the Child Tax Credit amount that I am allowed on my 2021 tax return?
- (Q) H4: How do I know if I don’t qualify for the repayment protection for filers based on their income during 2021? (updated February 1, 2022)
- (Q) H5: How do I know if I qualify for the full repayment protection for filers based on income during 2021?
We have also included below, the associated news releases IRS issued this week announcing these new and revised FAQs.
IRS News Release IR-2022-22, February 1, 2022
IRS Revises FAQs for 2021 Child Tax Credit and Advance Child Tax Credit Payments
WASHINGTON — The Internal Revenue Service today updated its frequently asked questions (FAQs) for the 2021 Child Tax Credit and Advance Child Tax Credit Payments.
This updated FAQ modifies a question and adds a new question (FS-2022-07 PDF):
- Question 4, Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return
- Question 10, Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return
These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.
IRS News Release IR-2022-21, January 31, 2022
WASHINGTON — These frequently asked questions (FAQs) are released to the public in Fact Sheet 2022-06 PDF, January 31, 2022.
The American Rescue Plan Act (ARPA) of 2021 expanded the Child Tax Credit (CTC) for tax year 2021 only. These Child Tax Credit FAQs focus on information helpful to taxpayers preparing their tax year 2021 tax returns.
Recipients of advance Child Tax Credit payments will need to compare the amount of payments received during 2021 with the amount of the Child Tax Credit that can be claimed on their 2021 tax return.
Those that received less than the amount they are eligible for can claim a credit for the remaining amount. Those that received more than they are eligible for may need to repay some or all of the excess amount.
The IRS has sent Letter 6419 in January 2022 to provide the total amount of advance Child Tax Credit payments that were received in 2021. The IRS urges taxpayers receiving these letters to make sure they hold onto them to assist them in preparing their 2021 federal tax returns in 2022.
These FAQs contain the following topics:
The Partner Support Team