IRS Letters You Need to Save for Your 2021 Tax Return

The IRS recently announced that recipients of Advance Child Tax Credits and Economic Impact Payments will receive letters from the IRS. You need to keep these letters with your tax records to help prepare your federal tax return due in April. You may have already received them, as the government began sending letters on December 22 of last year.
Economic Impact Letter 6474
Most qualifying taxpayers have already received their stimulus payment. However, some eligible people may have not have received it. In such a case, you should verify your eligibility to determine whether you need to claim a Recovery Rebate Credit for tax year 2020 or 2021. This stimulus letter only concerns the third round of income payments, which the government issued between March and December 2021.
Letter 6419, Advance Child Tax Credit
Letter 6419 will show the amount of the Child Tax Credit (CTC) payment you received in 2021, as well as the number of children used to calculate the advanced payment. If your family was eligible and did not receive an advance CTC payment last year, you can still claim the full amount on your 2021 return. Families, including those who do not usually file a tax return, will be required to file one for 2021. You will need to compare the amount of the payment received with the amount of Child Tax Credit you can properly claim on their 2021 return.
The IRS determined 2021 payments based on your 2019 and 2020 tax returns. Therefore, if your income changed in 2021 and you now have surpassed the income threshold to receive CTC, you must note this on your 2021 return and indicate you can no longer properly claim CTC.
If you have any questions concerning either of these letters, contact our office. For our clients, remember we provide complimentary unlimited tax planning advice that could save you thousands of dollars on future taxes.
Professional Tax Services is a locally owned provider serving over 3,500 local residents and businesses. For more information call 661-259-1967 or visit www.protaxservices.com. Through their complimentary EZ2 Thrive program, they provide unlimited free tax planning advice to their clients.