The Child Tax Credit was a hot topic for several political leaders this year. As families struggled to care for their families during the onslaught of the COVID-19 pandemic, the American Rescue Plan expanded the tax credit. The people who received tax credit payments can expect a letter from the IRS ahead of tax season.
The Child Tax Credit expanded during the pandemic and provided increased payments to families. Eligible families received $3,000 per child if they were over the age of six and $3,600 for children under the age of six. Both of the payments increased from the previous $2,000 payment. If eligible people filed tax returns in 2019 and 2020 and received a stimulus check, they received the child tax credit automatically.
Why is the IRS sending a letter to Child Tax Credit recipients?
The expansion helped low-income families, especially those struggling with food insecurity. The expansion resulted in a decrease of households that experienced hunger from 26 percent to 18.5 percent. Meanwhile, 32 percent of the families that received the credit used it to pay down debt. The IRS announced in December that it will be sending letters to Advance Child Tax Credit recipients.
Recipients are scheduled to get a letter in the mail sometime in December 2021 or January 2022. According to the IRS, the Child Tax Credit information statement will be Letter 6419. The letter is meant to help taxpayers receive all of the tax credits that they are entitled to. The letter will show the total amount of child tax credit payments that a person received in 2021 and the number of children claimed to calculate the payments.
Also, the IRS said, “Families who received advance payments will need to file a 2021 tax return and compare the advance Child Tax Credit payments they received in 2021 with the amount of the Child Tax Credit they can properly claim on their 2021 tax return.” People who want to see how they received in Child Tax Credit payments can check using the CTC Update Portal.
The IRS will also send letters to EIP recipents.
People who were eligible to receive Child Tax Credit Payments and didn’t can claim the full amount of the credit on their 2021 federal tax return when they file in 2022. The letters are meant to help recipients file easier and avoid processing errors and delays when they seek to claim the second portion of the child tax credit in April.
Individuals who received the third EIP (economic impact payment) will also be receiving a letter from the IRS in January. The letter is form 6475. Along with the Child Tax Credit, the letter to EIP recipients shouldn't be discarded. It gives the recipient the ability to review how much they received in EIP and it will help recipients determine if they're eligible for the Recovery Rebate Credit.