Mailbox-checking Season Has Begun: Don’t Forget to Save New Letters from the IRS, along with Other Anticipated Forms
By: Jill Ottley, CPA
If you’re like me, most of what shows up in the mailbox throughout the year makes a speedy trip to the garbage. However, this time of year is the exception. I’m on the lookout for tax documents, most of which still make their way via the postal service. These include mortgage interest statements, charitable donation receipts, W2s, annual brokerage reports, and – this year – two new letters from the IRS.
Advanced Child Tax Credit Payments
Many taxpayers with children received some portion of the 2021 child tax credits in the form of monthly advanced payments last July through December. If you are among them, watch for a letter from the IRS reporting the total you received.
Correctly reporting this amount on your 2021 will be imperative to reconciling and receiving the total amount of credit to which you are entitled. In other words, you won’t be able to claim the remaining portion of the credit if you fail to correctly report the amount already received.
Note that the IRS started sending out these letters in December, so you may have received it already. Be sure to save this letter and submit it to your CPA or tax preparer with your other tax documents.
Third Economic Impact Payments
The IRS issued the third round of stimulus payments in March through December of 2021. In some cases, taxpayers received this in two installments: an initial payment, and later, a “plus-up” payment based on their 2020 tax filing.
Similar to the Advanced Child Tax Credit, the amount received must be reconciled on your 2021 tax return. The IRS announced it will begin sending Letter 6475, which reports the amount received, to taxpayers this month.
Again, save Letter 6475 along with your other tax documents. Reporting the amount received correctly on your tax return will allow you to claim any additional amount you may be entitled to, based on your 2021 income.
Minimize the Tax Filing Dread
If possible, take a few minutes right now to prepare a folder or designated drawer in which to save all of the tax documents that will begin to arrive this month. Tax filing is always a little stressful, but less so when you avoid the annual mad hunt for a misplaced form. We’ve all been there! Plus, your tax preparation will go more smoothly and likely cost less if you provide your accountant with all of your documents at once.
If you have additional questions about the Advanced Child Tax Credits or Third Economic Impact Payments, click here to read additional information, and as always don’t hesitate to reach out to us here at Squire!