With tax season quickly approaching, many of us are already feeling the stress. From stimulus payments to child tax credits, there were a number of new things introduced by the Internal Revenue Service (IRS) over the last year that can make a difference in how people file their taxes in 2022. And to make things even more complicated, the agency is sending an important letter to some taxpayers that could be vital for filing their 2021 tax return. Read on to find out what information from the IRS you'll want to keep somewhere safe.
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If you get a letter from the IRS about the child tax credit, don't throw it out.
The IRS is sending an important letter to millions of taxpayers who received child tax credits last year. Letter 6419 will include the total amount of advanced child tax credit payments a taxpayer received in 2021, as well as the number of qualifying children that were used to calculate their payment, according to the IRS. You might have already received this letter because the agency started sending these out to some people in late Dec. 2021. But everyone else can expect to continue to receive their letter later this month.
"People receiving these letters should keep them. Do not throw them away. These letters can help taxpayers, or their tax professional prepare their 2021 federal tax return," the IRS said in a Jan. 5 announcement.
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This letter can help you get more money from the IRS.
According to the IRS, taxpayers will need to use Letter 6419 to file their 2021 tax return to compare the advanced payments they received last year with the remainder of the child tax credit they are owed and can claim on their return. "Advance Child Tax Credit payments are early payments from the IRS of 50 percent of the estimated amount of the Child Tax Credit that you may properly claim on your 2021 tax return during the 2022 tax filing season," the IRS explains on its website.
Taxpayers received payments in accordance with the number of children they have and their age. For each qualifying child 5 years old or younger, people should receive $3,600 in total from the child tax credit. This would have been divided up into $300 each month last year for a total advanced payment of $1,800. In terms of children ages 6 to 17, taxpayers should have received $250 each month per child for a total advanced credit of $1,500. The entire tax credit should amount to $3,000 per child this age.
Your return will be delayed if you don't use the information in this letter.
You won't receive any money from the IRS if you fail to use the information in this letter to properly reconcile credits on your 2021 federal income tax return. According to the IRS, the processing of your return will be delayed—and with the agency already anticipating heavy delays this year due to a large backlog, budget cuts, and staff shortages, your return might take even longer.
"That amount is going to be needed to be reconciled on their 2021 tax return," Sheri Fronsee, a CPA and tax researcher specialist with the National Association of Tax Professionals, told CNBC. "If you don't make that reconciliation, they're going to hold your refund until you do that. You don't want that to happen—make sure that reconciliation is done."
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If you can't find the letter, try the agency's website.
While financial experts and the IRS are warning taxpayers not to toss their letter, there are options if you accidentally threw yours out. If you can't locate the information in paper form, Mark Luscombe, the principal analyst for Wolters Kluwer Tax & Accounting, told USA Today that taxpayers should be able to find out how much the IRS says they were paid in 2021 for child tax credits on the agency's website.
Luscombe recommends comparing this to what you received by looking at your own bank statements. According to USA Today, child tax payments were made around the 15th of each month from July through December."If after checking the portal, the taxpayer still feels that the Letter 6419 is in error, they could then contact the IRS," Luscombe told the newspaper, noting that advanced credits could have ended up going to a different bank account or a check might have been lost in the mail.
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Kali Coleman Kali Coleman is a Senior Editor at Best Life. Her primary focus is covering news, where she often keeps readers informed on the ongoing COVID-19 pandemic and up-to-date on the latest retail closures.Read moreFiled UnderFinance • Income • Kids • NewsRead This NextTurbo Tax Will No Longer Let You Do This
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