Advance Child Tax Credit – Letter 6419, 2021 advance CTC

In late December 2021 and throughout January 2022, the IRS sent letters to taxpayers confirming the total amount of advanced child tax credit (ACTC) payments they received during 2021. The letter also indicates the number of qualifying children used in the calculation. This letter is important to retain as it will assist us while preparing your 2021 tax return in reconciling payments received against the total amount of which you are eligible to claim as a tax credit.

When preparing your 2021 tax return, we will use this letter to calculate the total amount of child tax credit for which you are eligible to receive versus the amount the IRS provided as an advance payment. If you are due an additional amount from what you have already received, you will be eligible to claim it on your 2021 tax return as applied against your tax liability, and refunded if you have sufficiently paid your tax liability via estimated payments or through payroll withholding. Alternatively, if you received more money from the ACTC than for which you are eligible, the total tax liability on your 2021 tax return will be increased by that amount, as you will be required to pay back the excess monies.

When sending us your 2021 tax documents, please include the letter you received from the IRS (if applicable). If you are unable to locate your IRS letter confirming the total advance child tax credit received, you can still access the information by visiting the Child Tax Credit Update Portal.

Economic Impact Payment #3 (stimulus payment) – Letter 6475 your Third Economic Impact Payment

At the end of January 2022 the IRS will begin to send a letter to taxpayers that received the third Economic Impact Payment (EIP3). EIP3 were issued between March and December 2021 to taxpayers based upon their filed 2019 tax return. Some taxpayers also received a “plus-up” payment during 2021 if the IRS determined, based upon their filed 2020 tax return, they were eligible for an additional amount.

The misreporting of your EIP3 will cause a delay in the processing of your 2021 tax return, as well as a delay in receiving any refunds to which you are due. Due to this, it is imperative to retain the letter and provide it to us when submitting your 2021 tax documents.

If you have questions, Neitzel Luke & Salopek Inc. is here to help. We can be reached at (440) 835-1040 or email us at LParente@nlacpas.com to get into touch.