The Advance Child Tax Credit is a hot topic these days. If you are receiving payments, you will need to report the total amount you received on your 2021 tax return. The IRS will be sending out letter 6419 in January 2022, which will provide the total amount of payments that were disbursed to you during 2021. Disbursed is the keyword in this sentence. For example, if you moved after filing your 2020 return the IRS has your old address and if they are paying you by check then the checks are going to your old address. The IRS will consider the checks that were mailed as being received even if you “did not deposit them . It is recommended that you keep track of the amounts received to compare to the letter 6419. If there is a discrepancy between the amount received and the amount stated in letter 6419 the burden of proof falls on the taxpayer.
The IRS has published some information on how to return payments. If the payment was a paper check and you have not cashed it, you can write void in the endorsement section on the back of the check. The mail the voided Treasury check to the appropriate IRS location for your area. Include a brief, written explanation stating the reason for returning the check. If the payment was a paper check and you have cashed it, or if the payment was a direct deposit, you can submit a personal check or money order payable to US Treasury on the memo line write AdvanceCTC and the social security number of the recipient of the check or deposit. Mail the check/money order along with a brief, written explanation stating the reason for the return payment to the appropriate IRS location. The following link provides the IRS locations. www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-o-returning-a-payment
It is recommended that you save letter 6419 that you will be receiving in January and include it with your tax documents provided to your tax preparer. Should you have questions or concerns, please do not hesitate to contact one of our trusted tax advisors.