Advanced Child Tax Credit: Everything You Need to Know
TurboTax CPA Lisa Greene-Lewis provides an overview of the essentials of the Advanced Child Tax Credit.
Video transcript:
Title : Advanced Child Tax Credit: Everything You Need to Know
- [MUSIC PLAYING] TRACY BYRNES: Lots of parents found money in their checking accounts over the last few months. This Advanced Child Tax Credit was given out to a lot of people. What is it and do I owe it back come tax time? Lisa Greene-Lewis, CPA and TurboTax expert, is with us right now. OK. So, first, explain what it is to us, the Advanced Child Tax Credit.
LISA GREENE-LEWIS: Yes, so under the American Rescue Plan, there was expansion of the child tax credit. There were increases in the amount that people were eligible for. So if your kids were under six, it went from $2,000 to $3,600. Kids six to 17, it went up to $3,000 from the $2,000. But also in it, it would give parents and families an advance on their 2021 child tax credit. And it would be about half of what you're eligible for. So if you were eligible for the $3,600, you would have started receiving advanced monthly payments in July. And for those six months, that would have amounted to $1,800. Then when you file your taxes, you would be eligible for the other half, just for an example.
TRACY BYRNES: Right. But if there was an error or a mistake or you weren't eligible or you were eligible in one year and now you're not this year, you actually owe the money back, don't you?
LISA GREENE-LEWIS: Right. If there were any changes in your income because the IRS, they use whatever your latest filing was. So when you go to file your taxes for tax year 2021, if your income ends up being higher and you're not eligible, then you may have to pay some of it back. Also you want to make sure you report the correct amount of advanced child tax credit payments that you already received so that you can get the other portion that you're eligible for and don't have any adjustments on your return.
LISA GREENE-LEWIS: Right. And in a previous video, we talked about how the IRS sent these letters out. So there was a letter sent. You should have gotten something, right? Hopefully it's in your tax folder right now. But something was reported to you about the exact numbers, right?
LISA GREENE-LEWIS: Right. You should have received letter 6419, so you should have that in front of you because the IRS indicated the amount that they issued to you in those advanced payments. And then you need to enter that amount when you do your taxes so that you don't have any adjustments on your return or adjustments on your refund. And I know TurboTax, we guide you through that part of your return and ask you to look at that letter 6419 and put the amount that's on that letter.
TRACY BYRNES: I feel like this is going to trip a lot of people up. They're going to be expecting money and have to give some back. So please pay attention to this. It's the advanced child tax credit. Lisa Greene-Lewis, thank you so much for explaining it all.
LISA GREENE-LEWIS: Thank you for having me. [MUSIC PLAYING]
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