By: Jennifer Linz, CPA, JD- Manager
Don’t be alarmed if you receive two letters from the Internal Revenue Service (IRS) in the mail at the end of January 2022. The IRS will be sending Letter 6475 and Letter 6419 via mail to Americans that were eligible for the third Economic Impact Payment (EIP) and the advance Child Tax Credit (CTC), respectively.
Under the American Rescue Plan, many Americans were eligible to receive a third EIP (stimulus payment) of $1,400 each plus $1,400 for dependents. The third payment started being issued in March of 2021 and continued through December of 2021. Americans that received the third EIP will receive Letter 6475 via mail at the end of January.
Didn’t receive a third EIP? Don’t worry – if eligible taxpayers did not receive the third stimulus payment in 2021, they can claim the Recovery Rebate Credit on their 2021 tax return that is filed in 2022.
Under the American Rescue Plan, the annual Child Tax Credit increased to $3,600 for children under the age of six and $3,000 for children ages six through seventeen. This credit was made available to eligible families as an advance via monthly payments of up to $300 per month for each child under the age of six and up to $250 for each child ages six through seventeen. Most of the advance payments were made by direct deposit during the months of July through December of 2021. Millions of American families received their final advance CTC payments on December 15, 2021.
In order to help reconcile the advance payments, the IRS is sending Letter 6419 via mail at the end of January. This Letter will provide the total amount of the advance CTC payments that were received by the taxpayer in 2021, and the number of qualifying children the IRS used to calculate the advance payments. This reconciliation will help determine the additional tax credit to claim on the 2021 tax return.
If taxpayers are unsure of the total dollar amount of CTC payments received, they can check the CTC Update Portal on the IRS website using this link: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal
Didn’t receive any advance CTC payments? Don’t worry – eligible families that did not receive the advance payments can claim the full amount of the Child Tax Credit on their 2021 income tax return, filed in 2022.
Please be sure to provide your Holbrook & Manter representative with IRS Letter 6475 and Letter 6419 when submitting your tax documents for the filing of your 2021 tax returns. As always, please contact us if you have any tax questions – we are happy to assist you.