If you received advance Child Tax Credit payments or the 2021 Economic Impact Payment, watch your mail in January for two new notices from the IRS.
Advance Child Tax Credit
Taxpayers who have received any advance Child Tax Credit payments this year will need the payment information for their 2021 tax return. If you were issued any payments, you should receive IRS Letter 6419 in January by mail with the total of your advance Child Tax Credit payments. This information may also be found in your IRS Online Account. If you have any eligible children and did not unenroll from receiving the advance, you may have received up to 6 payments totaling a maximum of $1,800 for a child under six or $1,500 for a child 6-17 years of age.
The total amount received in advance will be compared to the total amount of the Child Tax Credit for which you are eligible. The total credit is worth a maximum of $3,600 for a child under six and $3,000 for a child 6-17 years of age. Your total credit is subject to income phaseouts starting at an AGI of $75,000 for single filers and $150,000 for married filing jointly.
Note about repayment of the Child Tax Credit:
If you already received more of the Child Tax Credit than you are eligible for, you may be required to return the overpayments on your 2021 tax return. You qualify for repayment protection and won’t need to repay any excess amount (up to $2,000 per eligible child) if your main home was in the US for more than half of 2021 and your modified AGI for 2021 is below $40,000 for single filers and $60,000 for married filing jointly. Phaseouts follow and your repayment protection amount is reduced to $0 for an AGI over $80,000 for single filers and $120,000 for married filing jointly. If you do not qualify for repayment protection, you will need to report the entire excess amount on your 2021 tax return as additional income tax. This additional income tax will reduce the amount of your tax refund or increase your total tax due for 2021.
2021 Economic Impact Payment
Taxpayers who received any portion of the 2021 Economic Impact Payment issued this past spring or a plus-up payment should receive IRS Letter 6475 by mail in January. This notice will have the total amount issued and is needed to calculate the correct Recovery Rebate Credit on your tax return. You may have also received IRS Notice 1444-C shortly after receiving the main payment, which should list your total minus any plus-up payments. (Notice 1444-C looked like a letter from the White House rather than the usual IRS Notice format.)
The Recovery Rebate Credit reconciles your Economic Impact Payment with the total amount for which you were eligible. The full payment was worth $1,400 per eligible taxpayer and dependent, with phaseouts beginning at an AGI of $75,000 for single filers and $150,000 for married filing jointly. If you received a larger payment than you should have based on your 2021 tax return, you are not required to return any overpayment. If you did not already receive the full amount and are eligible for more, it will be calculated and received through your 2021 return.