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If you have been one of the beneficiaries of the Child Tax Credit, without a doubt, you should pay attention to tax issues related to next year’s tax season, since being a payment granted by the Internal Revenue Service (IRS), it will necessarily have a tax implication, so you are in time to decide if you continue to receive these advance payments .
As a first step you should keep in mind that since the IRS bases the payments of the Child Tax Credit on the tax returns of 2020, or sometimes from 2019, if your income has changed significantly upwards, it is possible You end up owing money to the federal agency, since you probably exceeded the income threshold .
For this reason, when submitting the corresponding tax return to 2021, you will need to compare the total amount of Advance Child Tax Credit payments you made this year in contrast to the amount of the Tax Credit for Children that you can claim based on your tax returns that you will declare fiscally in 2022.
So, if the total amount you can claim according to your tax returns of 2021 is greater than the total of your advance payments of the tax support that was granted to you, you can claim that remaining amount on your tax return of 2021 and under that scenario you will not have any problem nor will it affect your finances in any way.
But if the amount of advance payments is greater than what you can request from according to your tax return of 2021, you may have to reimburse the Internal Revenue Service for part or all of the overpayment, which will, of course, affect your personal finances, as it can be an amount, in the best case scenario close to $ 1, 800 dollars in case you have a minor child than six years .
In this sense, according to the IRS an excess it can be paid through a reduction in federal income tax refund, but if there is still a balance due, it will be treated as other tax balances. Then, it is recommended that you review your current status so that you do not have unpleasant surprises during the next tax season.
On the other hand, to those whose income is less than $ 40, 000 annual dollars as sole taxpayers or reach $ 60, 000 dollars as filers in pairs filing a joint return, you will not have to pay any amount of money for a possible excess. So in this case, taxpayers should rest assured that their personal finances will not be touched.
The IRS will also send a letter to families in January 2022 detailing the total amount of Advance Child Tax Credit payments awarded in advance payments, which can be used when filing your tax returns. Tax of 2021. It is recommended that if you have any questions, you consult directly with the federal tax agency.
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