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Child Tax Credit FAQs

The IRS revised its answers to frequently asked questions regarding the Child Tax Credit, adding a new set of six commonly asked filing season questions.  The new fact sheet posted on Wednesday to the IRS website answered a lot of open questions which were left unanswered by the Biden Administration’s inability to get the American Rescue Plan Act passed last year.

Questions Being Answered

 

Reconciliation Error:

A commonly asked question being answered by the IRS related to those who electronically filed, but input the incorrect amount for their Child Tax Credit .  More specifically, taxpayers were asking if they would need to file an amended return.

The IRS is urging these taxpayers and tax preparers not to file an amended return as the corrections will be made in-house by the IRS.  The IRS stated, “Do not file an amended tax return with the IRS. If you make a mistake in determining the amount of 2021 Child Tax Credit for which you are eligible, the IRS will (1) calculate the correct amount of the Child Tax Credit, (2) make the correction to your tax return, and (3) continue processing your return. If a correction is needed, the correction will increase the time it takes to process your return. The IRS will send you a notice explaining any change made.”

Notice for Changed CTC Amount:

The notice the IRS is sending to those who made a mistake when reconciling the credit was also being frequently asked by taxpayers.  The IRS’ updated FAQs also answer what you need to do after receiving this notice.

If taxpayers agree with the changes made by the IRS, there is no further action needs to be taken.  The notice is only informing taxpayers that the IRS already adjusted the Child Tax Credit information on their return.

If taxpayers disagree with the changes made by the IRS, they should take action.  The best next step to take would be to call the IRS’ toll-free number (which is located at the top right corner of the notice).  While calling it is important to have the appropriate information on hand to make the process as efficient as possible, including but not limited to a Social Security card and Individual Tax Identification Number.

Incorrectly Claimed Children

Another frequently asked question the IRS has been getting relates to a child being claimed by an incorrect parent.  If only one parent is to be claiming a child on their tax return, but both parents attempted to, whoever filed first was rewarded with the Child Tax Credit.  This may mean that some individuals incorrectly claimed a child on their return, and the other parent is wondering if they will be able to get the credit they deserve and what they should do.

If you find yourself in this situation, the IRS will be sending a letter to the parent trying to claim the child to determine who should be claiming them.  At this time if the other taxpayer has not corrected their return, they will also receive a letter inquiring about the situation.

Wrap Up

The IRS fact sheet contains more information than just the above answers, and anyone struggling with the Child Tax Credit should give the document a read-through.  Although the IRS tries to do its best to cover all topics, there will still be points of confusion had by taxpayers, if this is the case we recommend getting in contact with your accountant today!

 
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