If you were one of the millions who received child tax credit payments from July to December 2021, you may get a smaller refund or even owe money this filing season. Tax experts warn that the credit reduces write-offs at tax time, which may trigger a bill, depending on your 2021 modified adjusted gross income.
Certain tax experts also worry that parents will have a harder time filing taxes correctly this year because of that.”The filing of your tax return is going to be a little bit more difficult this year,” said Jim Fromi, Vice President of Fromi Tax Service, Inc. in Moline.Fromi explains that the checks are an advance on what the IRS believes your child tax credit will be.
Soon, those who got the checks will get letters outlining the payments they received.”The IRS is going to be mailing out letter 6419 that will show the amount of payments that they made during last year, because it was an advance on this year’s tax return,” Fromi said.
It may surprise some parents when they find out their refund may not be as large this year, if they took the advanced payments. However, Fromi reminds everyone that the payments were still a good thing.”It’s all extra money, so that’s good,” Fromi said. “People needed it with COVID relief, with the CARES act.”
Bottom line, tax preparers, including Fromi, say trying to file yourself this year could delay processing your return, especially if mistakes are made. “This is not the year that someone wants to do their own taxes,” Fromi said. “Whether they use someone like AmeriFile or any other preparer, that’s the best idea this year, because if that letter, the information in that letter is not reconciled with their tax return correctly, the refund’s going to be delayed by months.”
The IRS announced Monday that tax filing season will begin early this year, on Jan. 24, roughly two weeks from now. If you still have questions about child tax credit, visit here.