Do not be surprised if you receive a letter from the tax authorities in the coming weeks.
You’re not in trouble. The agency simply sends information about the third stimulus checks, which will be paid out in 2021. The letters are expected to be sent at the end of January.
If you get one, don’t throw it away just yet. “These letters can help taxpayers or their tax professional prepare their 2021 federal tax returns,” says the IRS said in a release.
Labeled Letter 6475, “Your Third Economic Impact Payment”, the correspondence will include how much incentive money you received in 2021, including any so-called plus-up payments.
You can use it to find out if you can claim the Recovery Rebate Credit on your 2021 tax return. This credit is the difference between the amount of the third incentive check you qualified for and the amount you actually received.
Incentive checks are not taxable, but must still be reported in the 2021 tax returns, which must be submitted this spring.
The 2021 incentive checks were paid to eligible recipients as of March last year. They are worth up to $1,400 per eligible taxpayer and each of their family members. Eligible recipients may be eligible for more money if they have not received a stimulus check at all or if their circumstances have changed. For example, if you still had a child in 2021, they will be eligible for their own benefit.
In addition, many families have received or will receive another letter regarding the payment of the Child Rebate (CTC) 2021. Labeled Letter 6419, it will contain crucial information about the CTC payments, such as how much your family received in advance and on how many eligible children the monthly deposits were based on.
“Families who have received advances should… compare the advances they received in 2021 to the amount of child tax they can correctly claim on their 2021 tax returns,” the agency said.
Families can also take advantage of the IRSs CTC update portal on IRS.gov to find the same information about their payments.
Please note: Households that have not or have not received the advances to which they were entitled can claim the money on their tax return this year.