anyone put together a letter yet for CTC paperwork

[schirallicpa]

I really dread this tax season.

I was going to spit out a letter to my clients with children that they need to bring me their letter from the IRS and confirm the amounts reported.

Which you know won't be right...........

Which you know the letter won't get out til March................

[KATHERINE]

Do you think they could come out a tool to check online?   People are funny, they told never get stimulus check, but they got debit card already.  IRS knew already.  

[schirallicpa]

A tool would be awesome.  Hopefully they have one AND keep it available for a while.  I still need the first round stimulus tool............

[Randall]

I won't send out a special letter.  The Eng Letter & Questionnaire is enough for me to start the year.  If ATX hasn't added some questions regarding the CTC & EIP, I'll try to add a few.  Then just do the best I can.  I did see on another forum, there was a formal request to IRS to have a tool available for practitioners, not just clients to set up an account with the IRS.  Hopefully, they will have the tool.  We'll see.

[Lee B]

"In January 2022, the IRS will send Letter 6419 with the total amount of advance Child Tax Credit payments taxpayers received in 2021. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax record."

[Lee B]

Copied from Accounting Today:

"Advance Child Tax Credit payment

“This is the biggest concern coming to the end of the year,” mentioned Mankowski. “There will need to be a reconciliation on Form 1040 similar to what was done for the stimulus payments. There might be a bit of a learning curve involved, but once a preparer gets through the first several returns it won’t be a significant issue.”

“But for many taxpayers, the advance payments will cause them to receive lower or no refunds, and there may be some surprises for those that end up owing money,” he added. “Over the years they’ve seen smaller refunds as a result of the new Form W-4, which was intended to get taxpayers closer to a breakeven point so they would have a little extra money in their pockets to spend during the year. Now with the ACTC, many will get less back, or will owe.”

If a taxpayer received payments for two children based on the 2020 return and they don’t claim both children in 2021, they would need to repay the excess on their return, unless protected under the law, he explained. Safe harbor protection only pertains to qualifying children and is based on adjusted gross income. Schedule 8812 (Form 1040) has been reformatted to account for these payments. “The IRS will send out Letter 6419, an end-of-year statement that outlines the payments received as well as qualifying children. It’s scheduled to be mailed in January,” he added.

The ACTC was not subject to offset, Mankowski observed: “It’s possible that one taxpayer could receive the ACTC based on their 2020 return and have repayment that was covered under the safe harbor, while the other taxpayer, who can legitimately claim the child, can also get the credit on their 2021 tax return, so there’s the potential for the CTC to be received by both parents."

[mcb39]

On 12/7/2021 at 7:52 AM, Randall said:

I won't send out a special letter.  The Eng Letter & Questionnaire is enough for me to start the year.  If ATX hasn't added some questions regarding the CTC & EIP, I'll try to add a few.  Then just do the best I can.  I did see on another forum, there was a formal request to IRS to have a tool available for practitioners, not just clients to set up an account with the IRS.  Hopefully, they will have the tool.  We'll see.

I put a post on my blog in November and again the other day.  My clients are reading it and liking it.  I simply said that we cannot prepare their tax returns without it.  That gets their attention.

[Patrick Michael]

I just sent a quick letter telling clients to expect a letter in early January and to make sure they do not throw it away.

[Lee B]

But what if they throw your letter away?

[Sara EA]

THEIR problem, not yours.

[Patrick Michael]

On 12/18/2021 at 2:20 PM, cbslee said:

But what if they throw your letter away?

I have done everything I can.  I'll tell them how to get a transcript and if they don't want to, go with what they give me after explaining the consequences if it's wrong.

[Randall]

What I really dread is if they finally pass a new law and delay the filing season.  Especially if they get something passed in 2022 and make it retroactive for 2021.

[mcbreck]

14 minutes ago, Randall said:

What I really dread is if they finally pass a new law and delay the filing season.  Especially if they get something passed in 2022 and make it retroactive for 2021.

If Congress doesn't pass the BBB which would (most likely) extend the Child Tax Credit as it currently exists - would the Child Tax Credit no longer exist at all or does it revert back to the previous system as a credit on your tax return instead of a larger prepayment?

[Sara EA]

Yes, the 2020 version of the CTC will be in effect, as well as the additional CTC rules.  No credit for children age 17.  What I'm concerned about is that people used to get, say, a $4k tax credit for two elementary school kids.  In 2021, it was $6k, but they already got $3k, so on their tax return the credit will be $3000 instead of their usual $4k. I have some clients who purposely have very little withholding because the CTC wipes out most of their tax liability.  They may not be happy this season.

[Pacun]

On 12/21/2021 at 9:52 PM, Sara EA said:

Yes, the 2020 version of the CTC will be in effect, as well as the additional CTC rules.  No credit for children age 17.  What I'm concerned about is that people used to get, say, a $4k tax credit for two elementary school kids.  In 2021, it was $6k, but they already got $3k, so on their tax return the credit will be $3000 instead of their usual $4k. I have some clients who purposely have very little withholding because the CTC wipes out most of their tax liability.  They may not be happy this season.

I liked this answer:

On 12/18/2021 at 9:04 PM, Sara EA said:

THEIR problem, not yours.

 

[mcb39]

On 12/16/2021 at 10:12 AM, mcb39 said:

I put a post on my blog in November and again the other day.  My clients are reading it and liking it.  I simply said that we cannot prepare their tax returns without it.  That gets their attention.

I reposted the information last week.  I have had so far 43 likes and 80some shares; so the word is getting out to some.

[mcb39]

On 12/25/2021 at 2:20 PM, Pacun said:

I liked this answer:

 

Also, remember, prior to the sweeping tax change bill, everyone got a $4500 exemption for each dependent.  Are we back in the playing field yet?  The past three years as a tax preparer have really been a hoot!  I am not expecting any better this year.  Some of my clients are just now getting their refunds from last year.  The phone is ringing already and our hands are tied.  Does anyone have any idea when we will be allowed to start filing?

[Lee B]

I pick January 28th

[Catherine]

3 hours ago, cbslee said:

I pick January 28th

I'll pick the 25th. (of January 2022)

[mcb39]

18 hours ago, Catherine said:

I'll pick the 25th. (of January 2022)

Let's hope that it is January Something!!!