Families in the United States eligible for increased Child Tax Credit payments in 2021 will be required to report that income on their tax forms this year.
Individuals may get a lower or bigger refund in certain situations because of changes in income or family circumstances over the previous year. In most cases, however, the effect on tax refunds will be small for those who are affected.
CTC benefits were increased as part of President Joe Biden’s $1.9 trillion American Recovery and Reinvestment Act of 2008, passed into law in December.
As part of the legislation, qualified families could sign up for monthly CTC payments distributed during the second half of 2021. Half of the total benefits were paid out in advance due to these payments. Families must now submit their tax returns for 2021 to get the second half of the dividend.
The amount of your refund when you filed your taxes in 2021 may be affected by a change in your income or family status (for example, the birth of a kid). GOBankingRates originally reported it.
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If your income increased to the point where it reduced or even eliminated the amount of CTC you could claim, you may wind up with a lesser refund or perhaps owing money as a result.
According to Trenda Hackett, a certified public accountant (CPA) and technical tax editor for the tax and accounting unit at Thomson Reuters, there will be a rebalancing. “It’s possible that your payment was more than the amount you were entitled to claim on your tax return in certain situations.”
As an alternative, you may be eligible to obtain a larger credit in 2021 if you have reduced your income or added a new dependant throughout the year. Additionally, your refund should be reflected in this situation.
Although most families will most likely land somewhere in the center, the effect on their refunds will not be significant in any direction for most of them.
According to CNBC, even families that have exceeded in monthly CTC payments may be eligible for repayment protection with the IRS, which would prevent them from receiving a bill.
Those who are married and filing jointly, or those who file as eligible widows, will be completely exempt from repayment if their adjusted gross income in 2021 is $60,000 or less (whichever is less).
Taxpayers who file as head of household will be entitled to full protection if their adjusted gross income (AGI) is $50,000 or less for single filers or $40,000 or less for married couples filing jointly but not jointly.
If your AGI in 2021 was $120,000 or higher if you are married filing jointly or a widower; $100,000 or higher if you file as head of household; or $80,000 or higher if you are single or married and filing separately, you will not be eligible for repayment protection.
If you were eligible for the CTC benefit, keep looking for Letter 6419 from the Internal Revenue Service. It will assist you in reconciling what you received in 2021 so that you may make the proper claim for the amount due this year.
It is possible that the letter was erroneous or that you did not get it; in this case, check the IRS’s web portal to see what payments you have received.