The Internal Revenue Service revised its answers to frequently asked questions on the Child Tax Credit, adding a new set of six commonly asked filing season questions.
In a new
The new section on the fact sheet includes answers to questions such as, “My spouse and I received advance Child Tax Credit payments in 2021. My spouse is now deceased. How do I calculate the Child Tax Credit on my 2021 tax return now that they are deceased?”
The IRS suggested, “If you file a joint 2021 tax return with your spouse, you will need to compare: 1. The total amount of the advance Child Tax Credit payments that you and your spouse received during 2021; with 2. The amount of the Child Tax Credit that you and your spouse can properly claim on your 2021 tax return.”
It recommended that taxpayers use Schedule 8812 (Form 1040) to determine their 2021 Child Tax Credit; report the advance Child Tax Credit payments they and their spouse received in 2021; and figure out any additional tax owed but only if they received an amount of excess advance Child Tax Credit payments during 2021 and do not qualify for repayment protection equal to that amount.
It noted that if a taxpayer is not filing a joint 2021 tax return with their spouse, they should not include the amount of advance Child Tax Credit attributable to their spouse. “In general, the final individual income tax return of a decedent is prepared and filed in the same manner as when they were alive,” said the IRS. “All tax year 2021 income up to the date of death must be reported and all credits and deductions to which the decedent is entitled may be claimed.”
Another commonly asked question is from taxpayers who filed their 2021 tax return electronically, but made a mistake reconciling their advance Child Tax Credit payments and are wondering if their return will be rejected by the IRS?
The IRS is urging taxpayers and their preparers not to file an amended return in such a case. “No, the IRS will not reject your tax return if you made an error in reconciling your 2021 advance Child Tax Credit payments,” said the IRS. “Do not file an amended tax return with the IRS. If you make a mistake in determining the amount of 2021 Child Tax Credit for which you are eligible, the IRS will (1) calculate the correct amount of the Child Tax Credit, (2) make the correction to your tax return, and (3) continue processing your return. If a correction is needed, the correction will increase the time it takes to process your return. The IRS will send you a notice explaining any change made.”
Another common question comes from taxpayers who received a notice saying the IRS had changed their 2021 Child Tax Credit amount and wonder what they need to do.
If taxpayers agree with the changes made by the IRS, no response or action is required, according to the agency. The notice is simply informing taxpayers the IRS already adjusted the Child Tax Credit claimed on their return.
However, if they disagree with the changes made by the IRS, they should call the IRS at the toll-free number listed on the top right corner of their notice. They should have a copy of their Social Security card and Individual Tax Identification Number ready when they call.
In another unfortunately common question, the IRS rejected a tax return because someone filed their 2021 return before they did and claimed their qualifying child. Taxpayers want to know if they are still eligible to claim their child for the Child Tax Credit and what they should do.
The IRS recommends they file a paper tax return, even though the agency is currently struggling to handle such returns, which typically cause long delays.
“Because your qualifying child’s Social Security number was provided on a 2021 tax return that the IRS received before your return, you will need to file a paper return,” said the IRS.
The IRS will then send the parent a letter inquiring about the child to determine who claimed them. If the other person hasn’t already corrected the Social Security number or filed an amended return to remove them, a letter will be sent to them as well.
In some cases, more than one person can claim a qualifying child. That leads to the next question: “Can a child be a qualifying child of more than one person? Can both people claim the Child Tax Credit for the same qualifying child?”
The IRS acknowledged that sometimes a child meets the relationship, age, residency, support and joint return tests to be considered a qualifying child of more than one person. However, even though the child is a qualifying child of each parent, generally only one person can treat the child as a qualifying child for the Child Tax Credit. For information about situations in which a child is a qualifying child of both parents or of more than one taxpayer, the IRS recommends consulting some other sections of the fact sheet.
The final new question involves what taxpayers should enter as their prior-year adjusted gross income when e-filing their 2021 return if they used the Child Tax Credit Non-filer SignUp Tool, which is mostly for parents who don’t typically file tax returns.
“When preparing your taxes and filing electronically, you must sign and validate your electronic tax return by entering your prior-year Adjusted Gross Income (AGI) or your prior-year Self-Select PIN,” said the IRS. “If you successfully used the Child Tax Credit Non-filer Sign-Up Tool last year to register for advance Child Tax Credit payments or claim a 2020 Recovery Rebate Credit, enter ‘$1’ as the prior year AGI verification. If you did not use the Child Tax Credit Non-filer Sign-Up Tool last year and you did not file an electronic or a paper 2020 Form 1040 or Form 1040-SR, you should enter ‘$0’ as the prior year AGI verification. If you filed an electronic or a paper 2020 Form 1040 or Form 1040-SR, enter the AGI amount from line 11 of the submitted 2020 Form 1040 or Form 1040-SR as the prior year AGI verification. If you’re waiting for your 2020 tax return to be processed, enter $0 as the prior year AGI verification.”
