money A simple error calculating the Child Tax Credit could delay your tax refund
Tax season is off to a bumpy start for some of the millions of taxpayers who received Child Tax Credit (CTC) payments last year because a key tax form from the Internal Revenue Service has errors.
“When we think about all of the taxpayers who are eligible for the Child Tax Credit, I mean, this is a huge issue,” Greg Kling, an associate professor at USC Leventhal School of Accounting, recently told Yahoo Finance (video above). “This is impacting millions of taxpayers.”
The agency warned that the 6419 letter detailing how much in advance payments taxpayers received last year could be incorrect, potentially delaying their tax refunds if the wrong figure is used on their federal returns.
"If you're off — even by a few dollars — the concern is your return is just going to get in a holding pattern,” Kling said, “and that's obviously not a good thing.”
Letters sent to taxpayers who filed as married filing jointly are being sent to each spouse separately, Kling said. Each of those letters should reflect only half of the amount received per household and couples will need to combine the amounts on their letters to file jointly.
If you suspect an error in your letter, the IRS recommends taxpayers review their records for advance payments of the CTC on their IRS online account. When filing, they should rely on the total amount reflected on the online account because it has the most up-to-date information regarding the CTC.
To speed up tax processing, the IRS is also urging taxpayers to file their returns electronically and set up a direct deposit to receive refunds. According to the agency, most taxpayers that use this combination should receive their refunds within 21 days — if filed correctly.
The incorrect letters also underscore the challenges the IRS is dealing with, including severe understaffing and a backlog of roughly 6 million unprocessed 2020 individual tax returns as of December.
“I would just tell everybody you've got to be patient with the IRS,” Kling said. “The (IRS) is still reeling from COVID legislation and trying to get that implemented, on top of that not having enough resources. I'm hearing from clients and colleagues that they still haven't processed returns from even 2020.”
Gabriella is a personal finance reporter at Yahoo Money. Follow her on Twitter @__gabriellacruz.
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