Two letters from the Internal Revenue Service this year will make tax filing season a bit more complicated but also could result in bigger tax refunds.
IRS Letter 6419 and Letter 6475 have unremarkable names, but they are necessary to complete a tax return for 2021.
The IRS has provided information on how to handle these two situations on its website. Mailing of the letters began in early January and is scheduled to continue through March.
Creating an online account with the IRS will allow access to information provided in these letters for anyone who has changed addresses or mistakenly thrown one or both of the letters away.
These tax benefits can be claimed even for someone who had no income for 2021, but according to the IRS, the only way to claim these benefits is to file a return.
Letter 6419 regards payments of the advanced child tax credit, which for the 2021 tax year gives $3,600 for each child under 6 and $3,000 for each child between 6 and 17.
This is a fully refundable credit, meaning that it reduces any taxes owed and is included in a taxpayer’s refund if there is any left over.
The American Rescue Plan, passed last March, allowed for advanced monthly payments of up to half of this credit per child for those who filed a tax return for 2019 or 2020.
The letter explains how much of the credit the taxpayer received in advance and how much he or she still owes. For example, someone who had a child in 2021 may still be owed the full credit for that child.
Those who received the advance portion of the credit will still receive the other half for every child claimed on their returns.
The advance may need to be repaid in some situations, but there are repayment protections in place depending on income. More information regarding specific situations may be found on www.irs.gov.
The second notice, Letter 6475, involves the third stimulus checks sent out last year. It was worth up to $1,400 for individuals and $2,800 for married filers, along with $1,400 for each qualifying dependent. The amount was reduced or phased out dependent on higher income.
Anyone who didn’t receive the full amount owed may claim it on a tax return through what the IRS calls the recovery rebate credit.
Like the child tax credit, the recovery rebate credit is fully refundable. It can help pay down any tax owed this year, and any left over is added to the taxpayer’s refund.
The recovery rebate credit is also available to be claimed for a 2020 tax return if the taxpayer did not receive one or both of that year’s stimulus checks.
Like normal tax refunds, these credits can be used by the IRS to pay outstanding federal tax debts, state tax debts, non-tax debts and delinquent child support.
- Contact Kevin Edwards at 662-581-7233 or kedwards@gwcommonwealth.com.
