2021 Income Tax Information
Important Update: 2021 Income Tax Information
An update and clarification of information from our previous tax blog article 2021 Tax Return Filings: Time to Start Planning, in which we discussed IRS letters for recipients of Advance Child Tax Credit Payments and/or Economic Impact Payments.
Advance Child Tax Credit Payments – Both parents may receive a Letter 6419
The IRS has begun sending Letter 6419 to parents who received Advance Child Tax Credit Payments. Those payments began in July 2021 to eligible parents, unless they took action to opt out of the payments.
For couples, the IRS is sending separate letters to each parent. Therefore, if a couple with one eligible child, who did not opt out of the payments, received a total of $1,800 of Advance Child Tax Credit Payments ($300 month X 6 months), it is our understanding that each parent will receive a Letter 6419 reporting payments received of $900. It is unclear if a parent who opted out of the payments will receive a letter indicating zero payments received.
Action Item: Please look for and retain all Letter 6419 documents received from the IRS and include all those documents with your 2021 tax information that you send to us.
If you do not receive a Letter 6419 or believe it is missing, you can use the IRS Child Tax Credit Update Portal to check on the payments you received.
Economic Impact Payment Letters (Letter 6475) Will be sent in late January
This letter centers on the third stimulus check worth $1,400 that the federal government delivered in March 2021. The check included a "plus-up" payment to people who were eligible for extra money based on changes in income or employment status from 2019 to 2020.
Letter 6475 will reflect how much that individual was paid and can help people determine whether they are entitled to, and should claim, the Recovery Rebate Credit on their tax returns when they file in 2022. It only applies to the third stimulus payment issued in March 2021, which were essentially advance payments on a credit that would be claimed on a 2021 tax return.
Action Item: Include any Letter 6475 documents you receive with the tax information you provide to us.
For additional information contact us at info@herbein.com.
