Advanced Child Tax Credit

Forum|Forum|4 years ago
July 28, 2021
2 replies
16 views

For 2020 tax returns every taxpayer was required to provide the exact amounts of the first and second stimulus payments. For 2021 will every taxpayer be required to provide the exact amount of the Advanced Child Tax Credit payments they received? Will the IRS provide them with a total that they can pass along to their tax preparer? Spending an extra 10 minutes with each of my 200+ tax clients adds up to 33+ hours during tax season.

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Accountant-Man

Level 13

Yeppir, that it will.

This is NOT the first time Congress has decided to give TPs advance tax credits, requiring them to know or remember that they were paid in advance and must NOT be claimed on the return. EIP #1 and EIP #2 are the most recent, with EIP #3 and Advanced CTC happening again for 2021.

We had this many years ago, too, when they raised the CTC from $600 to $1,000 and paid the extra $400 in advance. Ah, the good old days.

I guess we just have to suck it up, AGAIN, and hope that most of our clients have functioning brains.

** I'm still a champion... of the world! Even without The Lounge.

BobKamman

Level 15

Wow, all 200 of your clients have kids? But fortunately, there is nothing in the law that prevents you from setting your fees according to how much work you do. Is your time worth $150 an hour? Then $25 for that ten minutes. Of course, there is nothing to prevent your competitors from doing it for free.

There's a website called irs.gov where you can find answers to most questions. You have to take some time to research, but it took me five minutes to locate the following. I figure my time is worth $240 an hour, so that's $20 to pass along to all my clients with kids. I don't have that many because most of them are retired and not supporting their grandkids.

In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.

https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-h-reconciling-your-advance-child-tax-credit-payments-on-your-2021-tax-return

sjrcpa

Level 15

How do you think that will work?

For 2020, I have seen a grand total of two IRS letters 1344 for the EIP. While many of my clients' incomes are too high to receive the payments, more than 2 were eligible.

And yes I bill for my time on this (most of the time anyway)

The more I know the more I don’t know.

BobKamman

Level 15

It will probably work better since the letters are going out at the same time as W-2s, 1099s and organizers from those who send them. If the organizer mentions a $25 additional fee for misplaced IRS letters, you may see more of them than you expect.

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