Child tax credit denial 2021

[Jack56]

Greetings!

Had  MFJ client who filed on  extension 9/15/22. IRS just sent letter Child tax credits for 2 kids age 11 & 8 denied ($4000.00). Gross income $338,000, pretty typical for most years. No IRA contributions, Client says no Pre payment of child tax credit for either child received.

Any ideas as to why denied?

Jack [removed]

Michigan

[sjrcpa]

What reason was given in the letter?

"Client says no Pre payment of child tax credit for either child received." Did he check bank account(s) for direct deposits?

[Accountant-Man]

a) Are you SURE that they didn't get prepaid CTC during 2021?

[Jack56]

Thanks for reply, client did not file personal 2020 return until 10 15 21, always owes,  he has never had direct deposit from IRS and is a paper filer. he said he never received any check from IRS.

[Jack56]

IRS letter says 8812 was in error, says TP received advance tax credits that were not reconciled.

TP says never received any funds.

[Jack56]

Having client review records again, thanks for the help.

[BobKamman]

For a joint return, it's always a good idea to make sure you are communicating with both clients.  Does the wife have her own bank account, by any chance?  

[ljr]

Client swears up and down did not receive. Even if they never had direct deposit from the IRS the money was direct deposited into their account. They never looked at their statements and the money was there. Everytime on of my clients got that letter the IRS was correct. EVERYTIME. They need to check all bank accounts. 

[BobKamman]

Weren't there some people who gave IRS their bank information for deposit of the EIP's?  And then I think some people who were getting federal checks -- Social Security, pensions or veterans benefits -- received direct deposits to those accounts, because Treasury (not IRS) already had the information.   

[CMcCullough]

If client really did not receive the payment, you can do a trace.  This has the tracing information, though is out of date on how to check online to see if client received payment.  The CTC portal is no longer running, so a check to their transcript or to their online irs.gov account, should suffice.   https://www.taxpayeradvocate.irs.gov/news/tas-tax-tip-did-you-have-an-advance-payment-of-the-child-t...