Recipients of the third round of Economic Impact Payments; taxpayers should hold onto letters to help the 2022 Filing Season experience
The Internal Revenue Service announced that they will issue information letters to Advance Child Tax Credit recipients started in December and those who received the third round of Economic Impact Payments at end January. Using this data when preparing a tax return can reduce errors & delays during processing time; it’s important for you keep track these documents so 2021 taxes are done right!
Watch for advance Child Tax Credit letter
The IRS is sending out new letters to taxpayers who have been approved for advance payments of Child Tax Credit. The first wave will start coming in late December and continue into January, so be sure you’re ready! This letter includes information on how much total money was given as well as which children were used towards calculating those particular amounts- it’s important that all recipients keep these documents safe because there could potentially still come more waves after this initial introduction period ends.”
Families who received advance payments will need to file a 2021 tax return and compare the advance Child Tax Credit payments they received in 2021 with the amount of the Child Tax Credit they can properly claim on their 2021 tax return.
The letter contains important information that can make your tax return preparation easier. People who received advance CTC payments from the IRS may also check how much they were paid by using an online portal on their website called CTC Update Portal available on IRS.gov.
Eligible families who did not receive any advance Child Tax Credit payments can claim the full amount of the Child Tax Credit on their 2021 federal tax return, filed in 2022. This includes families who don’t normally need to file a tax return.
Economic Impact Payment letter can help with the Recovery Rebate Credit
The IRS has a reminder for this coming tax filing season, make sure to file an accurate return and use electronic filings with direct deposit so you can avoid any delays.
The Letter only applies to the third round of Economic Impact Payments that was issued starting in March 2021 and continued through December 2021. The third round of Economic Impact Payments, including the “plus-up” payments, were advance payments of the 2021 Recovery Rebate Credit that would be claimed on a 2021 tax return. Plus-up payments were additional payments the IRS sent to people who received a third Economic Impact Payment based on a 2019 tax return or information received from SSA, RRB or VA; or to people who may be eligible for a larger amount based on their 2020 tax return.
In the event that you didn’t receive payment for your stimulus-related purchases, it’s important to review all of our information in order to determine whether or not claiming recovery rebate credits is something worth doing.
Like the advance CTC letter, the Economic Impact Payment letters include important information that can help people quickly and accurately file their tax return.
The IRS is urging people to hold onto these letters and keep them in a safe place, so that they can be used when preparing their 2021 federal tax returns. If you need any help understanding what this letter means or if you have questions about your taxes, American Financial Solutions LLC is here for you! We know how complicated the world of taxes can get and want to make sure all our clients are fully informed about what comes next. For more information you can call the office of American Financial Solutions LLC at 203 591 1738 ext 3