The IRS encouraged taxpayers to use its online tools and resources to find the information they need to be ready to file their 2021 federal tax returns, including important special steps related to Economic Impact Payments (EIP) and advance Child Tax Credit (CTC) payments. This is the third in a series of reminders to help taxpayers get ready for the upcoming tax filing season. Additionally, a special page is available on the IRS website that outlines steps taxpayers can take to make tax filing easier.
Individuals, especially those who do not usually file tax returns, were urged to file their 2021 tax return electronically beginning January 24, 2022. Further, the IRS advised taxpayers to use a tax preparation software or a trusted tax professional to help guide them through the process and avoid making errors. Filing an incomplete or inaccurate return may mean a processing delay that slows the resulting tax refund.
Recovery Rebate Credit and Economic Impact Payments
Individuals who did not qualify for a third Economic Impact Payment or got less than the full amount may be eligible to claim the Recovery Rebate Credit. However, they will need to know the total amount of their third Economic Impact Payments received to calculate their correct 2021 Recovery Rebate Credit amount when they file their 2021 tax return. The IRS announced that it would send Letter 6475 with the total amount of the third Economic Impact Payment received beginning in late January.
Advance Child Tax Credit Payments
People will need to know the total amount of advance payments they received in 2021 to compare them with the full amount of the Child Tax Credit that they can properly claim when they file their 2021 tax return. Those who received the advance payments can access their online account to check the total amount of their payments. The IRS will also send Letter 6419 to provide the total amount of advance Child Tax Credit payments received in 2021. Accordingly, eligible families who did not get monthly advance payments in 2021 can still get a lump-sum payment by claiming the Child Tax Credit when they file a 2021 federal income tax return this year. This includes families who do not normally need to file a return.
IRS Online Tools and Resources
The IRS drew attention to its various online tools and resources, such as:
- The Interactive Tax Assistant: The Interactive Tax Assistant answers general tax law questions, including helping to determine if a type of income is taxable or if someone is eligible to claim certain credits and deductions. With changes to income and other life events for many in 2021, tax credits and deductions can mean more money in a taxpayer’s pocket.
- Online Account: Taxpayers can use their Online Account to securely see important information when preparing to file their tax return or following up on balances or notices. Moreover, taxpayers can view the amount they owe, make and track payments and view payment plan details. Taxpayers can also manage their communication preferences to go paperless for certain notices from the IRS, or to receive email notifications when the IRS sends them a new digital notice.
- Where’s My Refund?: Taxpayers can check the status of their refund using the Where’s My Refund? tool. The status is available within 24 hours after the IRS accepts their e-filed tax return or up to four weeks after they mailed a paper return.
- IRS Free File: Starting January 14, the IRS Free File program, available only through the IRS website or the IRS2Go app, will offer brand-name tax preparation software packages. Those who earned $73,000 or less in 2021 may qualify for Free File guided tax software. The software does all the work of finding deductions, credits and exemptions. Some of the Free File offers may include a free state tax return. Taxpayers comfortable filling out tax forms, can use Free File Fillable Forms, the electronic federal tax forms paper version to file their tax returns online, regardless of income.
- Direct Deposit: Direct deposit gives taxpayers access to their refund faster than a paper check. Individuals can use a bank account, prepaid debit card or mobile app to use direct deposit and will need to provide routing and account numbers.