IRS to issue letters to Advance Child Tax Credit recipients and recipients of 3rd round Economic Impact payment

12/23/21 – The Internal Revenue Service announced earlier this week that it will issue letters to those that received the Advance Child Tax Credit starting this December and to those that received the third round of the Economic Impact Payment at the end of January. These letters will contain information to use when preparing your 2021 tax return. Erpelding, Voigt & Co., LLP urges all clients to keep these letters to reduce errors and delays in processing.

Child Tax Credit Letter

To ensure all taxpayers received all the Child Tax Credit they are entitled to, the Advance Child Tax Credit letter will include the total amount of Child Tax Credit payments the taxpayer received in 2021. This letter will also include the number of qualifying children used to calculate the payments. Clients should keep this letter with all other tax records.

All families who received Advance Child Tax Credit payments will need to file a 2021 tax return and compare payments they received with the amount of payments they are eligible for on their 2021 return. Eligible families that did not receive payments in 2021 can claim the full amount of their 2021 federal tax return. Payments received can also be checked by using the CTC Update Portal.

Economic Impact Payment Letter

To ensure all eligible taxpayers received their entire stimulus payment, the Economic Impact Payment letter will include information to help the taxpayer determine whether they are entitled to claim the Recovery Rebate Credit on their 2021 tax return. Clients should also keep this letter with all other tax records.

This letter only applies to the third round of Economic Impact Payments that were issued starting in March 2021 and continued through December 2021. This letter includes “plus-up” payments, which are additional advanced payments that would have been claimed on the Recovery Rebate Credit on the 2021 tax return based on whether they were eligible for a larger amount.

Most taxpayers have already received their payments. However, taxpayers who are missing stimulus payments should review the information received to determine their eligibility and whether they should claim a Recovery Rebate Credit for the tax year 2020 or 2021.

Contact Erpelding, Voigt & Co., LLP for all additional questions.