![]() And the amount that you received is not taxable income to you. If you got more than you should have, usually because your income was too high in 2021 to receive the Recovery Rebate Credit, you do not have to pay back any of the amount you received. ![]() Now the good news – while you do need to enter the amount of the economic impact payment you received when preparing your return, this is only so the IRS can determine if you should have received more than you actually got. You can learn more about that in this blog. Likewise, if you received advance payments of your Child Tax Credit, you should receive Letter 6419 to report those payments to you as well, and there is also information you will need to have to accurately prepare your federal tax return. ![]() When preparing your tax return, you will want to enter the amount of the EIP that you received so that if you received less than you were entitled to, the software can calculate the correct amount of the Recovery Rebate Credit. If you received less than those amounts, or didn’t receive anything at all, then you may be eligible to claim the Recovery Rebate Credit when you file your 2021 federal income tax return. You should confirm that the amount reported in the letter is the same amount that you received, i.e., $1,400 for you (and $1,400 for your spouse, if married), and $1,400 for each dependent you claim on your return. The letter will inform you of the amount that the IRS paid to you for the third EIP payment. So now that you have your Letter 6475, what should you do with it? Well, don’t throw it away! At least, not just yet. But, like the previous payments made in 2020, the amount of the advance payment was determined by the income reported on either your 2019 return (if you had not yet filed your 2020 return), or your 2020 return if it was filed at the time the payments were issued. Unlike the previous rounds of advance payments, these payments phased out far more quickly once taxpayers reached an income threshold. These advance payments were actually advance payments of a tax credit passed in the ARPA, called the Recovery Rebate Credit. It also paid out $1,400 for each eligible dependent with a valid Social Security number or Adoption Taxpayer Identification Number (ATIN). This payment was equal to $1,400 for an eligible taxpayer with a valid Social Security number (and their spouse if filing a joint return). Why is the IRS issuing Letter 6475? You may recall back in the spring of 2021 that Congress passed the American Recovery Plan Act (ARPA), which authorized the issuance of a third round of Economic Impact Payments (EIP). Since we always say, “Call us if you get any letter from the tax agencies!” it’s good to know that our members are doing so! But is this really a notice you need to worry about? As “The Hitchhiker’s Guide to the Galaxy” used to say, “Don’t panic!” The IRS does sometimes send letters that don’t require assistance, and Letter 6475 is one of these. Here at TaxAudit, we have started receiving phone calls from our members about receiving an IRS Letter 6475.
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