The Child Tax Credits currently hitting bank accounts once a month represents half the total Child Tax Credit amount due to families. The other half can be claimed early next year when 2021 tax returns are filed -- as long as you have a Letter 6419, that is.
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What is a Letter 6419?
According to the IRS, families with eligible child dependents who received the first half of their Child Tax Credits via monthly payments in 2021 will be sent a Letter 6419 in January 2022. This letter will provide the total amount of your Child Tax Credit payments through the end of 2021. When it's time to file 2021 taxes early next year, you'll be asked for information provided in the letter in order to claim the other half of the tax credit.
The Sightline Institute reports that the average American receives around 41 pounds of junk mail each year. Most of us glance at it, make a quick assumption regarding whether it's important, and toss it out.
It may still be possible to file for the back half of the Child Tax Credit without a copy of your Letter 6419, but it is likely to take longer. While we're not yet sure precisely what the letter will include, we do know that the IRS is providing an early warning that it should be treated like any other important tax document. That means taking your time to go through your mail after the first of the year, so it doesn't get tossed out with the junk.
What about non-filers?
Not everyone is required to file a tax return. For example, in 2020, Americans who can answer "yes" to each of the following are not required to file:
- Are you under the age of 65?
- Are you single?
- Do you earn less than $12,400?
The only exception to this would be someone who has special circumstances that must be reported, like self-employment income.
Just because a person is not required to file a return does not mean they can't file a tax return. In order to receive the back half of their Child Tax Credits, Americans who don't normally file are being advised to file a 2021 tax return early next year.
Changes ahead?
By the time Americans begin to file 2021 tax returns, it should be clear to us whether monthly Child Tax Credit payments have been extended. President Joe Biden has proposed extending the credit until at least 2025, calling the credit both a middle-class tax cut and "the largest-ever one-year decrease in child poverty in the history of the United States of America."
Biden also said that the credit "will be one of the things that the vice president and I will be most proud of when our terms are up."
In addition to Biden, several prominent members of the GOP -- including Sen. Mitt Romney -- have proposed a permanent monthly payment to families with children. And the day before the first Child Tax Credit payment was sent, the six Democratic members of the Senate Finance Committee expressed their commitment to the continuation of monthly assistance to families with children.
Whether or not news breaks that the Child Tax Credit is to be extended (or made permanent), look for a Letter 6419 to be delivered in January. Once it's received, put it in a safe place. The idea is to make collecting the remainder of the Child Tax Credit as easy as possible come tax time.
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Stimulus Update: Want to Claim the Other Half of the Child Tax Credit? Make Sure You Have This One Thing - Motley Fool
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