Tax Tip: Get ready to reconcile Child Tax and Recovery Rebate credits

Published: December 28, 2021 | Last Updated: February 8, 2024

TAS Tax Tip: Get ready to reconcile Child Tax and Recovery Rebate credits

Get Ready to Reconcile Child Tax Credit and Recovery Rebate Credit Payments

Advance Child Tax Credit Payments

The IRS issued a ‘Get ready for taxes’ message to help you prepare for filing your tax
return this year. It includes information on how to get banked now (so you can receive a direct deposit), and information about qualifying charitable deductions for taxpayers who do not itemize their deductions. And of particular importance for 2021, it explains:

How families who received advance child tax credit (CTC) payments will need to compare the total advance CTC payments that they received in 2021 with the amount of the Child Tax Credit that they can properly claim on their tax return.
How individuals will also need the amount of their third Economic Impact Payment (EIP) and any Plus-Up payments received to calculate their correct 2021 Recovery Rebate Credit amount when filing their tax return.

Advance Child Tax Credit payments

For those who received advance payments of the CTC, in January, watch for and keep Letter 6419, that will show the total amount of advance CTC payments issued.

If you received advance payments based on a joint return, each spouse is treated as having received half of the payments, unless one of you unenrolled. To reconcile your advance payments on your 2021 tax return, add your advance payments total to your spouse’s advance payments total.

Economic Impact Payments/Recovery Rebate Credit

For those who received EIPs, in early 2022, watch for and keep Letter 6475, that will show the total amount of the third EIP and any Plus-Up Payments received. This helps taxpayers determine whether they may be eligible to claim the Recovery Rebate Credit.

Keep both letters so you can complete your tax return correctly.

See the IRS message for all the details. You can also visit our Recovery Rebate Credit and 2021 Economic Impact Payments (EIP3) or 2021 Child Tax Credit & Advance Payment Option pages.

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