IRS warns some taxpayers may have received incorrect Child Tax Credit letter

The IRS is sending letters to millions of parents who received the advanced Child Tax Credit payments last year, urging people to refer to those forms — letter 6419 — when filling out their tax returns. But on Monday, the agency warned that some of those letters may include incorrect information. 

The erroneous information could have a severe impact on some families’ finances, given that the IRS is advising taxpayers to take extra care this year that their tax returns are accurate. The agency is still digging out of a backlog of 6 million individual returns filed in 2021 — many of those were flagged for review because of mistakes taxpayers made in reporting how much they received in government stimulus payments or other tax credits.

A tax refund is often the biggest check a family receives each year, with payments in 2021 averaging about $2,800. That means there’s a lot on the line if a family misreports the amount they received in their advanced CTC payments. A processing holdup at the IRS could result in refunds being delayed for weeks or even months. 

The IRS said it is unclear how many people received erroneous letters, but said it could be a small group of taxpayers who moved or changed bank accounts in December. In those cases, the CTC checks may have been undeliverable, or the direct deposits bounced from the bank where an account was closed, Ken Corbin, the IRS chief taxpayer experience officer, said Monday on a conference call with reporters. 

“Then the letters may not reflect what the taxpayer actually received,” Corbin said. 

Taxpayers who are concerned the letter they received isn’t correct should check IRS.gov and log into their account through the site, he said. The IRS.gov website will have the correct information that the taxpayer should use on their tax return, he noted. 

“We want taxpayers to have the info they need to file an accurate return,” Corbin said.

New Child Tax Credit website

Also on Monday, the federal government launched a revamped website to help people who were eligible for the expanded child tax credit claim the second half of the payment they were due.

The site, ChildTaxCredit.gov, features a new tool that directs taxpayers to filing options, eligibility information and instructions on how to get the credit, according to the Treasury Department. Both virtual and in-person support will be provided in multiple languages.

“A very frustrating filing season”

The potentially erroneous letters could add to what IRS Commissioner Chuck Rettig warned may be “a very frustrating filing season” for taxpayers and tax preparers. He also encourages taxpayers to follow these tips to ensure smooth processing of their returns:

1. File electronically.

2. File as quickly as possible after the IRS starts accepting tax returns on January 24.

3. Request direct deposit.

“If taxpayers need a refund quickly, we are urging them to not file on paper,” Rettig said. 

Filing an inaccurate return — such as by guessing how much you received from the advanced CTC payments — could “create an expensive delay,” he added. 

If taxpayers heed that advice and there are no red flags on their tax return, they should receive their refund within 21 days, according to the IRS. Asked how long it could take to get a refund if, say, someone files on paper or has a mistake in their returns, Corbin said, “Right now we aren’t really sure.”

Reporting accurate data about the advanced CTC payments is important because the enhanced tax credit was paid half in advance, with the other half to be paid through taxpayers’ refunds after they file their 2021 tax return. 

For instance, families with children under 6 are entitled to $3,600 in tax credits, with $1,800 paid in monthly checks from July 2021 through December 2021. The remaining $1,800 will be claimed on their 2021 tax return. But if a family incorrectly says they received $1,500 in CTC payments last year and then claims $2,100 on their tax return — more than they are entitled to — the IRS will flag the return for review, delaying their refund. 

Corbin said he believes the erroneous letters were sent to a small group of taxpayers rather than millions of parents. “The online portal is correct, and we encourage them to check IRS.gov,” he said.

—With reporting from the Associated Press.