The Inner Income Service revised its solutions to ceaselessly requested questions on the Baby Tax Credit score, including a brand new set of six generally requested submitting season questions.
In a brand new reality sheet posted Wednesday to the IRS web site, the IRS highlighted the most typical questions to assist taxpayers who acquired advance funds of the Baby Tax Credit score or who have been eligible to obtain the Baby Tax Credit score in making ready their 2021 tax returns. The Biden administration’s American Rescue Plan Act final yr expanded the CTC for tax yr 2021 solely, however Democrats have been unable to cross an extension by means of a narrowly divided Congress.
The brand new part on the very fact sheet consists of solutions to questions comparable to, “My partner and I acquired advance Baby Tax Credit score funds in 2021. My partner is now deceased. How do I calculate the Baby Tax Credit score on my 2021 tax return now that they’re deceased?”
IRS headquarters in Washington, D.C.
Natalia Bratslavsky/Adobe
The IRS instructed, “Should you file a joint 2021 tax return along with your partner, you have to to check: 1. The whole quantity of the advance Baby Tax Credit score funds that you simply and your partner acquired throughout 2021; with 2. The quantity of the Baby Tax Credit score that you simply and your partner can correctly declare in your 2021 tax return.”
It beneficial that taxpayers use Schedule 8812 (Kind 1040) to find out their 2021 Baby Tax Credit score; report the advance Baby Tax Credit score funds they and their partner acquired in 2021; and determine any extra tax owed however provided that they acquired an quantity of extra advance Baby Tax Credit score funds throughout 2021 and don’t qualify for reimbursement safety equal to that quantity.
It famous that if a taxpayer isn’t submitting a joint 2021 tax return with their partner, they need to not embody the quantity of advance Baby Tax Credit score attributable to their partner. “Typically, the ultimate particular person earnings tax return of a decedent is ready and filed in the identical method as after they have been alive,” stated the IRS. “All tax yr 2021 earnings as much as the date of demise should be reported and all credit and deductions to which the decedent is entitled could also be claimed.”
One other generally requested query is from taxpayers who filed their 2021 tax return electronically, however made a mistake reconciling their advance Baby Tax Credit score funds and are questioning if their return will likely be rejected by the IRS?
The IRS is urging taxpayers and their preparers to not file an amended return in such a case. “No, the IRS is not going to reject your tax return in the event you made an error in reconciling your 2021 advance Baby Tax Credit score funds,” stated the IRS. “Don’t file an amended tax return with the IRS. Should you make a mistake in figuring out the quantity of 2021 Baby Tax Credit score for which you might be eligible, the IRS will (1) calculate the correct quantity of the Baby Tax Credit score, (2) make the correction to your tax return, and (3) proceed processing your return. If a correction is required, the correction will improve the time it takes to course of your return. The IRS will ship you a discover explaining any change made.”
One other frequent query comes from taxpayers who acquired a discover saying the IRS had modified their 2021 Baby Tax Credit score quantity and marvel what they should do.
If taxpayers agree with the modifications made by the IRS, no response or motion is required, in accordance with the company. The discover is just informing taxpayers the IRS already adjusted the Baby Tax Credit score claimed on their return.
Nonetheless, in the event that they disagree with the modifications made by the IRS, they need to name the IRS on the toll-free quantity listed on the highest proper nook of their discover. They need to have a duplicate of their Social Safety card and Particular person Tax Identification Quantity prepared after they name.
In one other sadly frequent query, the IRS rejected a tax return as a result of somebody filed their 2021 return earlier than they did and claimed their qualifying baby. Taxpayers wish to know if they’re nonetheless eligible to say their baby for the Baby Tax Credit score and what they need to do.
The IRS recommends they file a paper tax return, regardless that the company is at present struggling to deal with such returns, which generally trigger lengthy delays.
“As a result of your qualifying baby’s Social Safety quantity was supplied on a 2021 tax return that the IRS acquired earlier than your return, you have to to file a paper return,” stated the IRS.
The IRS will then ship the guardian a letter inquiring in regards to the baby to find out who claimed them. If the opposite individual hasn’t already corrected the Social Safety quantity or filed an amended return to take away them, a letter will likely be despatched to them as nicely.
In some circumstances, a couple of individual can declare a qualifying baby. That results in the following query: “Can a baby be a qualifying baby of a couple of individual? Can each individuals declare the Baby Tax Credit score for a similar qualifying baby?”
The IRS acknowledged that typically a baby meets the connection, age, residency, help and joint return assessments to be thought-about a qualifying baby of a couple of individual. Nonetheless, regardless that the kid is a qualifying baby of every guardian, typically just one individual can deal with the kid as a qualifying baby for the Baby Tax Credit score. For details about conditions wherein a baby is a qualifying baby of each dad and mom or of a couple of taxpayer, the IRS recommends consulting another sections of the very fact sheet.
The ultimate new query includes what taxpayers ought to enter as their prior-year adjusted gross earnings when e-filing their 2021 return in the event that they used the Baby Tax Credit score Non-filer SignUp Device, which is usually for fogeys who don’t usually file tax returns.
“When making ready your taxes and submitting electronically, you need to signal and validate your digital tax return by coming into your prior-year Adjusted Gross Earnings (AGI) or your prior-year Self-Choose PIN,” stated the IRS. “Should you efficiently used the Baby Tax Credit score Non-filer Signal-Up Device final yr to register for advance Baby Tax Credit score funds or declare a 2020 Restoration Rebate Credit score, enter ‘$1’ because the prior yr AGI verification. Should you didn’t use the Baby Tax Credit score Non-filer Signal-Up Device final yr and also you didn’t file an digital or a paper 2020 Kind 1040 or Kind 1040-SR, it’s best to enter ‘$0’ because the prior yr AGI verification. Should you filed an digital or a paper 2020 Kind 1040 or Kind 1040-SR, enter the AGI quantity from line 11 of the submitted 2020 Kind 1040 or Kind 1040-SR because the prior yr AGI verification. Should you’re ready on your 2020 tax return to be processed, enter $Zero because the prior yr AGI verification.”