What You Need to Know About the Child Tax Credit and Economic Impact Payment Notices

Many taxpayers have already received IRS Letters 6419 and 6475 containing details about their 2021 advance child tax credit (CTC) payments and economic stimulus payments. Here’s what you need to know about the letters, this year’s CTC refund, and what to do about potentially erroneous information.

In January 2022, the IRS issued two separate letters to taxpayers who received pandemic-related stimulus payments in 2021, including the following:

• Letter 6419: Advanced Child Tax Credit Payments, which notes the amount of advanced payments received in 2021 and how many qualifying children were included in order to calculate the payment.
• Letter 6475: Economic Impact Payments (EIPs), which communicates the total amount of the third economic stimulus payment received by the taxpayers for 2021 and any “plus up” payments.

These IRS letters are essential to prepare your 2021 tax return and to determine if the calculations are correct. You may be able eligible for additional money, or you could have been presented with erroneous information.

The IRS warned that some taxpayers may have received incorrect information in the letters and should be diligent in claiming the correct amount on their returns. For example, the IRS may have issued a larger amount than the taxpayer actually received. This could be due to the taxpayer relocating or switching bank accounts, so the taxpayer may want to double check their account on IRS.gov to confirm the correct amount for their tax return.

Child Tax Credit

Please note that married couples filing jointly will each receive IRS Letter 6419 in the mail. These are not duplicates, but rather each letter represents half of the total amount issued to the family collectively. This means that married couples will need to combine the total amounts shown in Box 1 and report that new number on their federal income tax return this year.

The enhanced child tax credit is not over yet, even though the advanced payments ended in December 2021. The monthly payments only represented half of a family’s estimated total credit. Eligible families can claim a credit on their 2021 tax return of up to $1,800 per child under the age of 6 and up to $1,500 per child between the ages of 6 – 17. Taxpayers who opted out of advance payments may receive a credit for up to $3,600 or $3,000 per child, respectively.

Economic Impact Payments

IRS Letter 6475 reflects the amount paid for the third stimulus check and any “plus up” payments received. “Plus up” payments are any additional stimulus funds paid to qualifying taxpayers based on their 2019 return or those eligible for a larger payment based on their filed 2020 return.

If you had a baby last year, adopted a child, or if your income changed significantly, you could be eligible for additional stimulus funds.

The first two rounds of the EIPs were reconciled in 2020 returns and will not be noted in IRS Letter 6475.

Next Steps

Taxpayers will not pay taxes on the enhanced child tax credit or the economic impact payments, but the information will need to be included on the 2021 tax return.

Please be sure to provide a copy of each letter to your advisor with your tax documents. If you discarded or misplaced the letter, you can visit the IRS’ Child Tax Credit Portal and log in to your account to find the necessary information.

If you have any questions about the abovementioned IRS letters, please contact me at dmathieu@bpw.com or (805) 963-7811.