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The 2021 tax returns will be slightly different for families who received the enhanced child tax credit last year.
That’s because the monthly payments that were sent to millions of eligible families with children from July through December were only half the credit. Now those who got the money have to show what they got to make sure they get the second half of their 2021 tax refund.
The IRS has started sending letters to families indicating the total amount of advance payments they have received. The agency will continue to send the form, called Letter 6419, to families until the end of January.
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“This amount will need to be reconciled with their 2021 tax return,” said Sheri Fronse, CPA and tax researcher with the National Association of Tax Professionals.
Reconciliation at tax time
Families should keep the letter and use it to properly reconcile the child tax credit when filing their 2021 income tax returns. The information will be helpful in filling out Schedule 8812 (as well as Form 1040) which will determine how much. money they will take out of credit.
“If you don’t make this reconciliation, they will withhold your refund until you do,” Fronse said. “You don’t want that to happen – make sure the reconciliation is done.”
If you don’t receive the letter, there are other ways to make sure you have the correct information to properly file your taxes. Families can also check the amount they received from the Child Tax Credit Advance Payments using the IRS CTC Update Portal.