Tax season is officially underway: Monday marks the first day that the Internal Revenue Service (IRS) is accepting and processing tax returns.
Parents or guardians filing their taxes will have to fill out different paperwork this year. The IRS will be sending Letter 6419 to people who qualified for advanced child tax credit money in 2021.
Last year, as part of the third national stimulus check during the pandemic, people with kids were able to receive additional aid for each child in their household. Those monthly payments were sent out from July through December.
This letter will help you report the amount of money you received and claim any money still owed to you.
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"The reason that this is important is because it's money that the IRS gave you in advance of a credit that you're going to take on your 2021 tax return. So on your 2021 tax return, there's a true up of how much should you have gotten versus how much they've already advanced to you. So if there's a deficit, meaning you're due more, you'll get more when you file your tax return. And if you got too much, there's a possibility that you may have to repay the excess amount that you weren't supposed to receive," said MMNT Certified Public Accountants Partner Karl Badey.
So how do you know if you can claim more money?
The federal program that allowed for these child tax credit payouts in advance didn't get support from Congress, so it expired in December. However, some families were still waiting for payouts.
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Now, those families can file a 1040 form along with the Letter 6419 to claim the rest of the money owed to them.
The letter is important because it can tell you if you owe money.
"If your income is dramatically different in 2021 than it was in previous years, you may be ineligible for those payments that you already got, so you might have to be prepared to pay some back," Badey said.
The IRS started sending out the letters in December. If you don't have it or didn't get any child tax credit payments last year, you can double-check your information on the IRS website.
All tax filers could see delayed returns this year because of an IRS worker shortage in addition to a huge workload from pandemic-related programs.
The IRS is seeing a lot of backlogs and is still getting through 2020 tax returns. On top of that, legislation that would have given the IRS billions of dollars to help process returns has stalled.
Experts say returns could be delayed weeks. To be best prepared, they say you should file early, file electronically, get your refund via direct deposit and try to work with a tax professional.
