IRS Updated Child Tax Credit Guidelines


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Tax season is already shaping up to be interesting this year for parents — and their accountants — calculating tax returns in light of the Child Advance Tax Credit. On January 12, 2022, the IRS updated the Advance CTC FAQ page to provide taxpayers and tax preparers with additional guidance.

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As of the 2022 tax season, CTC is not taxable. However, parents must reconcile the amount they received with the amount they were expected to receive based on their 2021 adjusted gross income.

“Those who have received less than the amount to which they are entitled can request a credit for the remaining amount. Those who received more than they are entitled to may have to repay some or all of the excess amount,” the IRS said in a news release announcing the FAQ update.

The FAQ clarified a few key points that taxpayers may not have understood. Especially :

  • Child tax credits are not taxable and are not reported as income on your 2021 tax return.

  • You must reconcile your prepayments with the amount of credit you are entitled to on your 2021 tax return or your tax return may be delayed.

  • The IRS contacted recipients of the CTC advance in June 2021, before they were disbursed.

  • Payments were distributed monthly between July 15, 2021 and December 2021.

  • The IRS has sent, or is sending, letter 6419 to notify taxpayers of the total amount of CTC prepayments made throughout 2021.

  • Child tax credit advance payments are not considered income and will not affect eligibility for benefits or government assistance.

Learn: Child Tax Credit: I Got Money, But I Usually Don’t File — Should I File a Tax Return This Year?
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Updates to the FAQ page also explained how much families could receive under the CTC advance program, how they could opt out of receiving advance credits, and how to reconcile their payments on their tax returns.

The FAQ pointed out that IRS helplines “do not have information beyond what is available on” and to rely on the website for details.

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This article originally appeared on IRS Updated Child Tax Credit Guidelines


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