Watch for Child Tax Credit and Economic Impact Letters from the IRS

January 18, 2022 | Article

If you received advance Child Tax Credit (CTC) or Economic Impact Payments (EIPs) from the government in 2021, be on the lookout for letters from the IRS. The letters provide important information that could be relevant when preparing 2021 income tax returns.

What to Expect from the IRS Child Tax Credit Letters

The IRS has begun sending letters including the total amount of advance CTC payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. The letters are labeled “Letter 6419, 2021 advance CTC”.

Taxpayers and their tax professionals will want to review this information and compare it to the amount of CTC that can be claimed in your 2021 tax return. If you received less than the amount you’re entitled to, you can claim a credit for the remainder; if you received more advance CTC payments than you’re entitled to, you may need to repay some or all the excess.

If you received advance CTC payments in 2021 but haven’t received your Letter 6419 or have lost it, the IRS suggests you check the amount of your payments using its CTC Update Portal.

To help clarify the amount of CTC that taxpayers can claim on their 2021 tax return, the IRS recently updated its list of frequently asked questions (FAQ). The updated FAQ – listed in IRS Fact Sheet 2022-03 – provides guidance on calculating the 2021 CTC, comparing and reconciling that amount to the advance CTC payments received, updating your CTC information, and other information that may be needed when preparing your tax return.

What to Expect from the Economic Impact Payment Letters

The IRS will also soon begin issuing another letter, “Letter 6475, Your Third Economic Impact Payment,” to taxpayers who received Economic Impact Payments (EIPs), or stimulus payments, in 2021. Similar to the advance CTC letter, this letter will summarize the amount of stimulus payments you received in 2021 and the process for claiming an additional credit, if you’re eligible, in your 2021 tax return. And the IRS has also released a list of FAQ (IRS Fact Sheet 2022-04) concerning EIPs.

What to Do with the Letters

Watch for the IRS’ advance CTC and EIP letters, and be sure to keep them with your 2021 tax information.

Stay up to date with the latest tax issues and trends through our Tax News & Views Blog.

This article is provided for general informational purposes only. It is not legal, accounting or other professional advice, as it does not address any individual facts, circumstances or concerns. Before making personal or business related decisions, please consult with appropriate legal, accounting or other qualified professionals.

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