Americans who have received the third round of stimulus checks or an early payment of the child tax credit should be on the lookout for two important letters from the Internal Revenue Service.
The IRS said it began publishing the letters on child tax payments in December and will continue through the first part of the new year, while the letters on child tax payments stimulus packages will be delivered by the end of January.
The agency urged anyone receiving the letters to keep them before the 2021 tax reporting season, which will likely begin later this month. The information in the letters is intended to help individuals avoid errors and delays in processing their returns this year.
Families who received monthly payments of the enhanced child tax credit last year will receive a letter – called Letter 6419 – from the IRS notifying them of the total amount of the advance payment they received and the number of eligible children used to calculate the payments.
Since at least half of the bonus credit will be paid out as a lump sum when parents receive their 2021 tax return, beneficiaries should keep the letter and use it to accurately reconcile the credit they already have. received when filing their taxes this year. The information is relevant in determining how much money families receive in addition to credit when they fill Schedule 8812 and Form 1040.
People who have received the monthly installments can also check the amount of their installments using the CTC Update Portal.
If families have opted out of monthly payments, they can claim the full amount of the child tax credit on their 2021 federal income tax return. This also applies to families who normally do not need to file. of income.
Low- and middle-income parents are eligible to receive $ 3,000 for each child aged 6 to 17 and $ 3,600 for each child under age 6 under the Expanded Child Tax Credit. Payments are based on income and are starting to disappear for people earning over $ 75,000 and married couples earning over $ 150,000. The tax credit is reduced by $ 50 for every $ 1,000 a family earns above the income thresholds.
If families earn too much to qualify for the softened tax credits, they can still receive the $ 2,000 credit for their children if their income level is less than $ 200,000 for individuals and $ 400,000 for couples. married.
There is no limit to the number of children who can receive the credit per family.
The second letter – Letter 6475 – that the IRS sends relates to the third stimulus check valued at $ 1,400 that the government issued in March 2021. The check included a “plus” payment to those who were entitled to receive it. additional money according to the evolution of income. or employment status from 2019 to 2020.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The final letter will state how much that person was paid and can help people determine if they are entitled and should claim the clawback refund 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 down payments on a credit that would be claimed on a 2021 tax return.
“Most of the eligible people have already received the payments,” the IRS said. “However, people who are missing stimulus payments should review the information to determine their eligibility and whether they should claim a clawback refund credit for the 2020 or 2021 tax year.”