With TY2021 tax preparation underway, there are many questions regarding the Child Tax Credit and Advanced Child Tax Credit Payments (and Third Recovery Rebate Credit). 

Yesterday, in an effort to better assist tax professionals and taxpayers in the accurate preparation of TY2021 tax returns, the IRS issued a news release containing updated Frequently Asked Questions (FAQs) that Partner Support is sharing with you below. 

We have also included access to an earlier IRS News Release containing important information regarding Information Letters that taxpayers will receive and should bring with them to their tax preparation appointments. 

• Letter 6419 – Advance Child Tax Credit Payments: Mailing began in December 2021 and will continue through January, 2022. The letter will include the total amount of advance Child Tax Credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. People who received the advance CTC payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov.
• Letter 6475 – Third Recovery Rebate Credit: Mailing to begin in late January, 2022. Letter 6475 only applies to the third round of Economic Impact Payments that was issued starting in March 2021 and continued through December 2021. If your client does not receive Letter 6475 (or lose it), they can find it on their IRS account. If they don’t have an online account set up, they can create one on the IRS website to verify their details. The third round of Economic Impact Payments, including the “plus-up” payments, were advance payments of the 2021 Recovery Rebate Credit that would be claimed on a 2021 tax return. Plus-up payments were additional payments the IRS sent to people who received a third Economic Impact Payment based on a 2019 tax return or information received from SSA, RRB or VA; or to people who may be eligible for a larger amount based on their 2020 tax return.

IRS News Release – IR-2022-10, January 11, 2022

IRS Updates FAQs for 2021 Child Tax Credit and Advance Child Tax Credit Payments

WASHINGTON — The Internal Revenue Service today updated frequently asked questions (FAQs) for the 2021 Child Tax Credit and Advance Child Tax Credit to help eligible families properly claim the credit when they prepare and file their 2021 tax return.

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 will send Letter 6419 in January of 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.

This extensive FAQ update PDF includes multiple streamlined questions for use by taxpayers and tax professionals and is being issued as expeditiously as possible.

The updates can be found in:

• Topic A: General Information
• Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit
• Topic C: Calculation of the 2021 Child Tax Credit
• Topic D: Calculation of Advance Child Tax Credit Payments
• Topic E: Advance Payment Process of the Child Tax Credit
• Topic F: Updating Your Child Tax Credit Information During 2021
• Topic G: Receiving Advance Child Tax Credit Payments
• Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return
• Topic I: U.S. Territory Residents and Advance Child Tax Credit Payments
• Topic J: Unenrolling from Advance Payments
• Topic K: Verifying Your Identity to View your Payments
• Topic L: Commonly Asked Shared-Custody Questions
• Topic M: Commonly Asked Immigration-Related Questions
• Topic N: Returning a Payment

Related IRS News Release: 

IRS News Release IR-2021-255, December 22, 2021 | Español

IRS Issues Information Letters to Advance Child Tax Credit Recipients (Letter 6419) and Recipients of the Third Round of Economic Impact Payments (Letter 6475); Taxpayers Should Hold onto Letters to Help the 2022 Filing Season Experience

• Excerpt: WASHINGTON — The Internal Revenue Service announced today that it will issue information letters to Advance Child Tax Credit recipients starting in December and to recipients of the third round of the Economic Impact Payments at the end of January. Using this information when preparing a tax return can reduce errors and delays in processing. The IRS urged people receiving these letters to make sure they hold onto them to assist them in preparing their 2021 federal tax returns in 2022.

Thank you, 

The Partner Support Team