The Inner Income Service issued a set of often requested questions Monday for submitting season, with new materials added on the expanded Baby Tax Credit score.
The up to date FAQ doc solutions questions equivalent to will the quantity of Baby Tax Credit score be diminished if a taxpayer’s 2021 revenue is simply too excessive, how does 2021 modified adjusted gross revenue (AGI) scale back the quantity of the Baby Tax Credit score, and the way does the primary phaseout scale back the 2021 Baby Tax Credit score to $2,000 per youngster?
The FAQs come because the IRS has despatched hundreds of thousands of letters to taxpayers concerning the quantity they acquired in month-to-month advance Baby Tax Credit score funds, and a few are discovering that they might want to repay a few of that cash in the event that they earned an excessive amount of revenue final yr. The IRS has additionally admitted that a number of the letters include incorrect and out-of-date data.
The IRS famous that recipients of advance Baby Tax Credit score funds might want to evaluate the quantity of funds acquired throughout 2021 with the quantity of the Baby Tax Credit score that may be claimed on their 2021 tax return.
“People who acquired lower than the quantity they’re eligible for can declare a credit score for the remaining quantity,” stated the IRS. “People who acquired greater than they’re eligible for could have to repay some or the entire extra quantity.”
The IRS has despatched Letter 6419 in January of 2022 to supply the full quantity of advance Baby Tax Credit score funds that had been acquired in 2021. The IRS is encouraging taxpayers who acquired these letters to ensure they maintain onto them to assist them put together their 2021 federal tax returns in 2022.
Inner Income Service headquarters in Washington, D.C.
Samuel Corum/Bloomberg
Nonetheless, the company additionally steered final week that the letters could not all the time have probably the most up-to-date numbers and is asking taxpayers to verify their on-line taxpayer accounts for the e quantity the IRS has on report, somewhat than the quantity listed on the letters that had been despatched to taxpayers and even within the new Baby Tax Credit score portal (see story).
The brand new FAQs embody the next matters:
- Matter A: 2021 Baby Tax Credit score Fundamentals;
- Matter B: Eligibility Guidelines for Claiming; the 2021 Baby Tax Credit score on a 2021 Tax Return;
- Matter C: Reconciling Advance Baby Tax Credit score Funds and Claiming the 2021 Baby Tax Credit score on Your 2021 Tax Return;
- Matter D: Claiming the 2021 Baby Tax Credit score If You Don’t Usually File a Tax Return; and
- Matter E: Generally Requested Immigration-Associated Questions.