Will the advance on my child tax credit hurt me in 2021?

Question

I’m trying to catch up on my taxes for 2020, 2021, and 2022.

A few years ago I adjusted my withholding to account for the $4000 I get from the child tax credit with my two kids. But I forgot to adjust the withholding based on the fact that I got an advance child credit in 2021 worth about $3000. And holy smokes wouldn’t you know it I won’t have that $3000 to offset my income taxes for that year! And I completely didn’t think about that. My tax is generally straddled the line between owing and paying and since I don’t think I made a tax extension payment in 2021 does anyone know how this will affect me? Yikes!

VolvoGirl · Accepted Answer

Turbo Tax will automatically give you the full credit.  But you got half of it in advance so you have to enter that.  It will reduce your refund or turn it into a tax due.  Because you already got some.

xmasbaby0 · Answer

We cannot see your information or your tax return so we cannot say how you will be affected by the advance child tax credit payment. We do not know enough about your overall situation.

When you prepare your 2021 tax return you MUST enter the amount of the advance child tax credit that you received during 2021 during the months from July to December of 2021. The IRS sent you a letter 6419 that shows how much they sent to you. If you are filing a joint return you will have a letter for the amount attributed to your spouse too. You can get the "other half" of the credit for 2021 and it will show up on line 28 of your Form 1040.

And....you must also enter the amounts of the stimulus checks you received for 2020 and for 2021. The IRS sent you letter 6475 for those amounts. The amount received for the first two stimulus payments must be entered on your 2020 return; the amount received for the third stimulus check must be entered on your 2021 return. If you did not receive the full amount of the stimulus checks, then you can get the rest of it as a recovery rebate credit, which will show up on line 30.

If you requested an extension for 2021, you were supposed to pay your estimated tax due by April 15 of 2022; any remaining amount due should have been paid by October 15, 2022.

When you requested your extension you were supposed to pay your estimated tax due. Did you enter the payment you made into your tax return? Go to Federal>Deductions and Credits>Estimates and Other Taxes Paid>Other Income Taxes

The IRS knows how much they sent to you for the child tax credit and for the stimulus checks. They cross check every return with amounts on lines 28 and 30, so if you make a mistake, they will reduce your refund accordingly--- and it will take them longer to process the return.

Online preparation and e-filing for 2019 and 2020 and 2021 is permanently closed.

To file a return for a prior tax year

If you need to prepare a return for 2019, 2020 or 2021 you can purchase and download desktop software to do it, then print, sign, and mail the return(s)

https://turbotax.intuit.com/personal-taxes/past-years-products/

You may also want to explore purchasing the software from various retailers such as Amazon, Costco, Best Buy, Walmart, Sam’s, etc.

Remember to prepare your state return as well—if you live in a state that has a state income tax.

https://ttlc.intuit.com/community/state-taxes/help/how-do-i-contact-my-state-department-of-revenue/00/25573

When you mail a tax return, you need to attach any documents showing tax withheld, such as your W-2’s or any 1099’s. Use a mailing service that will track it, such as UPS or certified mail so you will know the IRS/state received the return.

Federal and state returns must be in separate envelopes and they are mailed to different addresses. Read the mailing instructions that print with your tax return carefully so you mail them to the right addresses.

Note: The desktop software you need to prepare the prior year return must be installed/downloaded to a full PC or Mac. It cannot be used on a mobile device.

If you are getting a refund, there is not a penalty for filing past the deadline. If you owe taxes, the interest/penalties will be calculated by the IRS based on how much you owe and when they receive your return and payment. The IRS will bill you for this; it will not be calculated by TurboTax.