This year’s tax filing season is likely to be another tough time due to pandemic-related tax changes. But the first step for many taxpayers is simple: check the mail.
The Internal Revenue Service is sending special statements to the millions of Americans who received monthly payments last year from the expanded child tax credit, part of the pandemic relief program. The agency is also sending letters to people who received the third stimulus payment last year.
Child tax credit advance payments were half of a family’s estimated credit. To claim the other half, people must enter information from the IRS return on their federal tax return to reconcile the amounts. The document, IRS Letter 6419, details the total amount of installments made last year and how the amount was calculated.
A quick refresher: Congress temporarily extended the Child Tax Credit for the 2021 tax year. This made the credit more generous, offering up to $3,600 per child, up from $2,000 previously. And because she wanted to get financial help to families quickly during the pandemic, she started paying half the credit in advance, divided into monthly installments issued from July to December. Aid went to families with about 61 million children, according to the Treasury Department.
Married couples should expect to receive two separate letters — one for each spouse, said Misty Erickson, tax content specialist at the National Association of Tax Professionals, a professional group of thousands of tax preparers.
Trish Evenstad, a board member of the National Association of Enrolled Agents, a group of federally licensed tax professionals, said the envelope of one such letter she saw was clearly marked “Document significant tax”.
“I hope people save him,” Evenstad said.
The information in the letter will be used to calculate the amount of credit remaining to be paid to the taxpayer, she said. Recipients should compare the letter with their bank statements, she said, to see if they agree.
The IRS letter advises recipients to view their payments online at the agency’s child tax credit portal. Anyone who has not received one or more of the payments listed is encouraged to call the IRS before filing a return.
If there is a discrepancy between a filer’s records and the official IRS letter, some tax professionals may encourage filers to use the information on the letter to avoid delays in processing the return and issuance of refunds.
But others may urge filers to use the amounts shown in their records, if they have documentation – such as a bank statement – to show they are accurate. That, however, could cause the IRS to flag the return for review, delaying the entire refund — not just the amount related to the child tax credit, said Erin Collins, the National Taxpayer Advocate. Collins directs the Taxpayer Advocate Service, an independent agency representing taxpayers within the IRS.
One option might be to file a return using the IRS numbers, then file an amended return later with the amounts documented in the filer’s records. Filers would eventually get the correct amount of credit, without delaying their full repayment.
But Eric Smith, an IRS spokesperson, advised against this approach because the agency already has a large backlog of amended returns to process, and wait times will likely lengthen once filers start submitting. returns for 2021. “Amended returns take a long time, even under the best of circumstances,” he said.
Evenstad said filers who want to get at least part of their refund can choose to file with the IRS numbers and then have the agency trace the payments in question so they can get the money once the difference is made. verified.
“They should definitely talk to their accountant,” Collins said, noting that his office doesn’t give tax advice. Since there is still time before returns can be filed, she said, taxpayers can try to contact the IRS to correct any discrepancies. Be aware, however, that waiting times for help can be long. “It’s not going to be a quick fix,” she said.
If you have received advance payments but do not receive a letter from the IRS, you can go to the IRS Child Tax Credit Update website and create an account to check your information online. (You’ll need to verify your identity, using ID such as a driver’s license or passport, and you’ll need a way to take a photo of yourself and upload it.)
The total credit amount varies from family to family and is based on your child’s age as well as your income and filing status. Families with children 5 and under are eligible for credits of up to $3,600 per child, with up to $300 received monthly in advance; those with children ages 6 to 17 are eligible for up to $3,000, with up to $250 per month upfront. Families are eligible for the full amount if they earn less than $150,000 and are married and filing jointly. Single filers who earn less than $75,000 are also eligible for the full amount, as are heads of household filers earning less than $112,500.
Most people used the payments to buy food and clothing and pay for utilities, according to a report by the Urban Institute. Democrats had sought to keep larger child tax credits past 2021 as an anti-poverty program, but negotiations have stalled in Congress.
The IRS is also sending a second letter later this month regarding the third round of economic impact payments, also known as stimulus checks. The third batch of stimulus checks, for $1,400 per person, were sent from March as part of the pandemic relief effort.
Most eligible people have already received the payments. But if you didn’t, or if you received less than the full amount, the letter – known as Letter 6475, Your Third Economic Impact Statement – will help you determine if you can claim the money as a “recovery rebate credit” on your 2021 tax return.
As the 2022 filing season approaches, the IRS is still working through a backlog of returns from last year. “They’re starting this filing season still digging a hole from last filing season,” Collins said.
The IRS website says that as of Dec. 18, the agency still had 6.3 million unprocessed tax returns. They include 2020 returns with errors and those requiring “special handling,” such as corrections to recovery rebate credits.
In these cases, it takes longer – sometimes much longer – than the usual 21 days to issue a refund. In some cases, according to the agency, it could take up to four months.
Tax professionals prepare for clients who may be confused by the steps required to reconcile various prepayments on their tax return. In a press release, the National Association of Tax Professionals said recent tax law changes and IRS backlogs “could cause complications” when filing a 2021 return: “Tax preparers of revenue could be facing their toughest tax season yet.”
Filers can take at least two steps to make tax season easier: file your return electronically and arrange for your refund to be automatically deposited. “Paper is no friend of the IRS,” Collins said.
Here are some questions and answers about the expanded child tax credit and the 2022 tax filing season:
Will everyone eligible for the child tax credit receive a letter?
The IRS says people who received advance payments from the credit in 2021 will receive letters. (People who were eligible but preferred to wait and get the full credit with their tax return could opt out of monthly payments.) But even if you received a payment in July and then opted out of the remaining prepayments, you should still expect to receive a letter, according to H&R Block.
When does tax filing season officially open this year?
Returns can be filed as early as January 24.
Last year, the start was delayed by about two weeks, until February, due to technical and personnel problems related to the pandemic. Last year, the filing deadline was also extended by one month.
When is the tax filing deadline this year?
The official deadline this year for most people is April 18, a few days later than normal due to a holiday in Washington, DC, according to the IRS. But the agency has extended the filing deadline to May 16 for people from certain states hit by recent natural disasters, including Kentucky (tornadoes) and Colorado (wildfires). Filers in Maine and Massachusetts get an extra day, until April 19, due to the holidays.