Important Information to Prepare Your 2021 Tax Return
There were several different tax credits put into effect last year which may impact your 2021 taxes. It is important you are aware of your eligibility for the 2021 tax credits, as well as key documents from the IRS to look out for.
Coronavirus Stimulus Relief
If you met the requirements but did not receive the third economic impact payment (the coronavirus stimulus relief) for 2021, a maximum of $1,400 per qualified person, or received a lower amount than anticipated, please inform your tax preparer since a credit may be claimed on your 2021 tax return. If you received Notice 1444-C from the IRS, be sure to send this in with your other tax documents. Phaseout of coronavirus relief stimulus payments began at adjusted gross income of $75,000 single and $150,000 married filing joint.
The Advance Child Tax Credit
If the amount of your child tax credit exceeds the total amount of your advance child tax credit payments, you can claim the remaining amount of your child tax credit on your 2021 tax return. If you receive a total amount of advance child tax credit payments that exceeds the amount of child tax credit that you can properly claim on your 2021 tax year, you may need to repay to the IRS some or all of that excess payment.
In January 2022, the IRS sent out Letter 6419 to provide the total amount of advance child tax credit payments that were disbursed to you during 2021. Be sure to submit this letter with your other tax documents. Your CPA will need to refer to the advanced child tax credit letter when preparing your 2021 tax return.
Please refer to our prior article, The Advance Child Tax Credit Explained, for more information.
The rules and implications relating to these credits are complex, so be sure to consult your Nisivoccia tax professional to discuss your specific situation.