IRS Wants Taxpayers to Save ACTC and EIP Letters

If taxpayers get a letter from the Internal Revenue Service relating to either the Advance Child Tax Credit or Economic Impact Payments, they need to file the letters for safekeeping.

Those taxpayers will need the letters when they file their 2021 income taxes next year. The IRS is urging letter recipients to hold onto the letters because their information can help reduce errors and speed up processing of their returns.

Letters will be mailed soon

They IRS says it will mail out Letter 6419, 2021 Advance CTC, starting this month and continuing into January. The letter includes the total advance Child Tax Credit payments the taxpayer received in 2021 and the number of qualifying children the taxpayer used to figure their advance payments.

Here’s why it’s important that taxpayers retain these letters: families who got the advance payments will have to use this information when they file their 2021 returns in order to claim the remaining half of the credit.

The return will basically have them compare the advance payments they received with the remaining amount of the credit they’re still eligible to get. Using the letter makes preparing tax returns easier. It also speeds things up at the IRS.

Taxpayers who got the advance payments can also use the CTC Update Portal on the IRS website to check the amount of their payments.

Families who are eligible for the credit but didn’t get the advance payments can still claim the full amount of the credit on their 2021 tax return—even if they don’t normally need to file.

EIP recipients to get their own letters

Taxpayers should start getting Letter 6475, Your Third Economic Impact Payment, in late January.

This letter goes out to those who received the third Economic Impact Payment (EIP), to help them determine if they qualify for any remaining Recovery Rebate Credit on their 2021 tax return.

The third EIP was an advance payment of the Recovery Rebate Credit that would be claimed on the 2021 tax return.

Most eligible individuals have already gotten their payments, but those who are still missing stimulus payments need to look over the IRS letter to determine if they’re eligible and if the need to claim the credit for either the 2020 or 2021 tax years.

Note that Letter 6475 will also go out to recipients of “plus-up” payments, which were extra payments the IRS sent out to certain taxpayers. “Plus-up” recipients received a third EIP based on:

  • A 2019 income tax return; or
  • Information from the Social Security Administration, Railroad Retirement Board, or Veterans’ Administration; or
  • A 2020 income tax return that showed the taxpayer was eligible for a larger amount.

These EIP letters—like the letters for the Child Tax Credit—should be retained for use when the payment recipients file their 2021 income tax returns.

Visit the IRS website for more information on the advance Child Tax Credit, Economic Impact Payments or other COVID-19-related tax relief.

Source: IR-2021-255