Policy Spotlight: Child Tax Credit

Keep an eye out for Letter 6419 from the IRS which you’ll need when you file your 2021 tax return, check that your information is correct via IRS.gov, and visit the revamped ChildTaxCredit.gov if you have questions.

Tax season is here again with an added wrinkle this year for millions of working parents: the expanded Child Tax Credit.

Part of the American Rescue Plan signed by president Biden in March, the expansion included six monthly advance payments of up to $300 per child which began arriving in bank accounts in July.

The other half of the payments will be disbursed in a lump sum upon filing your 2021 taxes, the deadline for which is Monday, April 18. Here is where the wrinkle comes in: The payments were based on income from 2020, so the amount of credit parents will receive when filing our taxes may have to be adjusted if earnings or family size changed in 2021.

Crucial to ironing out this wrinkle is Letter 6419 (such a warm ring to it) from the Internal Revenue Service which tells us how much money we received in payments from July through December and how many kids they included in their calculations.

You’ll want to check their accounting, especially, if you had kids or a significant change in income in 2021, or if you’re among a group of taxpayers who moved or changed bank accounts in December, because, for you, information in Letter 6419 from the IRS may be wrong.

To check if the information in the letter you received is correct, visit IRS.gov and set up or log-in to your account, which will have the correct information to use on your tax return, the IRS assures us.

You’ll also want to check out the revamped ChildTaxCredit.gov site which was launched on Monday to help people claim the second half of the payment, with information on filing options, eligibility information, and instructions on how to get the credit.

The expanded child tax credit payments were a lifeline for many of our clients and for the 91% of low-income families who used their advance child tax credit payments on basic needs including food, clothing, school supplies, utility bills, and rent. Overall, 61.2 million children across more than 36 million households benefitted from the expanded payments in December, when it kept 3.7 million children out of poverty according to the Columbia University Center on Poverty and Social Policy.