It's the first week of January and some people are already working on their taxes. They're expecting a refund and they want the Internal Revenue Service to have their forms as soon as possible so the agency can process them when tax season 2022 officially starts.
Those enthusiastic filers, however, might want to take a break. In order to properly file their 2021 tax returns, many likely will need one or both tax statements the IRS is sending out this month.
One is a notice of how much an individual got as the third Economic Impact Payment (EIP) issued in 2021.
The other document contains details on the amount of Advance Child Tax Credit (AdvCTC) they received last year.
Like most official IRS communications with taxpayers, these special informational letters are being sent via the U.S. Postal Service.
Accounting for EIP #3: The EIP statement, officially known as Letter 6475, will help filers determine if they received the maximum COVID relief amount that was authorized by the American Rescue Plan Act (ARPA). If you got the previous two EIPs, then this latest letter will not be new to you.
EIP payments of up to $1,400 person were delivered to individuals who were eligible based on their prior 2020 or 2019 tax return information. Taxpayers also got $1,400 for each qualifying child.
Shortly after ARPA became law last March, the third EIPs started going out, and were distributed throughout 2021.
The IRS said that most eligible taxpayers got the money. But most is not all.
If you didn't get the maximum 2021 EIP, Letter 6475 can help you get additional coronavirus relief for which you qualify when you file your 2021 tax return. You'll use the information in the letter to claim the Recovery Rebate Credit on your taxes.
Since the COVID relief payments technically were credits, any amount you are due as the Recovery Rebate Credit on your 2021 tax return can help reduce any tax you might owe. Even better, the credit is refundable.
This means that if you have more of the credit than you owe Uncle Sam, or you don't owe any tax, then you'll get the credit amount as a refund.
Reconciling AdvCTC, too: Similarly, IRS Letter 6419 is on the way to families who got half of the enhanced Child Tax Credit (CTC) amount last year.
The credit for qualifying dependents for the 2021 tax years was increased to $3,600 for younger children and $3,000 for older youngsters, also as part of the ARPA. In addition, that new law instructed the IRS to send eligible families half of the credit amounts early as monthly payments from July through December 2021.
To get the balance of the CTC, which could be as much as $1,800 per each child age 5 of younger or $1,500 for dependent children ages 6 to 17, you must claim it when they file their 2021 taxes. Letter 6419 will help you calculate the correct remaining credit you're due.
You'll need to file Schedule 8812, Credits for Qualifying Children and Other Dependents, with your Form 1040 to claim the credit.
Find more info on more IRS forms
at the ol' blog's Talking Tax Forms 2022 page.
No letter? File anyway: Some taxpayers opted out of getting the advance credit last year, many because their financial and tax situations had changed from the 2019 or 2020 tax year data the IRS was using.
If this is you, since you didn't get the AdvCTC amounts, you won't get Letter 6419.
But if you do find that you qualify for at least some of the Child Tax Credit, you can claim the appropriate amount on your 2021 tax returns.
Repaying too much AdvCTC: Then there are taxpayers who might discover that their changed 2021 tax circumstances mean they got too much of the Child Tax Credit in advance.
If this is you, then the news is not so good.
Working with the amount shown in your Letter 6419, you'll have to determine if you must repay some or all of the excess AdvCTC you got last year.
Tax filing timing: Regardless of which IRS 2021 payment letters you're expecting, keep an eye on your snail mail box.
Some of the AdvCTC letters began going out in late December. The EIP letters will be on their way later in January.
And as to when you can send the IRS your Form 1040? You can do that as soon as you get all the tax statements you need to file, from the special COVID-related letters discussed here to W-2 and 1099 forms to all the other material you need, and which the IRS usually is copied, to completely and accurately file.
The tax agency, however, won't process any tax returns until the official start of the 2022 tax filing season.
And that is when? The latest word from the IRS is that it will let us know the filing season's kick-off date "soon."
Since Tax Day 2022 is April 18 — yes, that's a few days late due to Emancipation Day holiday falling this year on April 15 — the expectation is that the filing season will start roughly on time, which is the end of January.
You also might find these items of interest:
- Determining child-related tax breaks when you're divorced
- You got your last 2021 Advance Child Tax Credit payment. Now what?
- Tax credit for other dependents can help families with older kids, aging parents