Don’t Panic If You Receive This Letter From the IRS
If you find an unexpected letter in your inbox this week purporting to be from the IRS and offering you thousands of dollars in cash in child tax credit, don’t panic – this is not a scam. In fact, you will want to save these letters as receipts for the very real refundable tax credit that was provided under President Biden’s America’s Salvation Plan. Here’s what you need to know.
How much does a child tax credit cost and how is it different this year?
The Child Tax Credit is a tax credit of up to $ 3,600 per child for tax authorities with dependent children, and 88% of families should be eligible for at least some amount, according to the IRS. ( This Lifehacker post reveals this for you in more detail.) … The loan is unique in that it is a repayable loan, paid in advance, with half of the money sent in the form of regular checks on the 15th of every month, starting in July and continuing until the end of the year (the remaining half of the loan will be claimed as part of your 2021 tax return ).
What is this IRS letter about?
In fact, 36 million families have received two letters: one that says “you may be eligible” for child tax credit, and another, a supplementary letter that gives you an estimate of what you owe in reality. Please note that it is possible to get the first letter and end up not applying for the loan, as it is prorated for those who exceed certain thresholds of annual gross income (AGI) based on your 2019 or 2020 tax return (to get an estimate how much you can expect to get, use the CNET calculator here ). If your AGI for tax year 2021 is less than the following, expect to receive $ 3,600 per child:
- Single: $ 75,000
- Head of family: $ 112,500
- Joint registration in marriage: $ 150,000
It’s important to note that these advance payments are based on what your AGI might be for 2021, so the IRS is creating a portal where you can report adjustments to your 2021 income or your child’s dependents status (such as having a child). new baby). It is expected to be online by July 1st (for now, keep an eye on this IRS web page for more information on the portal when it becomes available).
What should I do with these letters?
Until you actually receive a check or direct deposit, you will want to keep both letters for accounting purposes – especially the second one, as it includes an estimate of how much money you will actually receive. If this turns out to be less than your due, you can use these letters as part of your refund claim when filing your 2021 tax return.
What if you haven’t received these letters? Well, the IRS just started shipping them less than a week ago, so they could get caught in the mail. Otherwise, you can confirm:
- That you really qualify for the tax credit
- Does the IRS have your last address on file
- That you actually filed a return for 2019 or 2020.