What to do if you don’t get a payment or don’t get enough money, and how to declare your stimulus check on your taxes.
The IRS will send third stimulus checks to more than 175 million Americans in 2021, with each adult and child receiving $1,400. Even though the money isn’t taxable income, you’ll need to disclose it on your tax return now that it’s time to file.
You must appropriately report your stimulus check payments to submit your taxes correctly and receive your tax refund on time. According to IRS Commissioner Charles P. Retting, the IRS “received far more than 10 million returns” in 2020 that wrongly reported stimulus money, causing manual scrutiny and severe refund delays. The Internal Revenue Service (IRS) has issued critical guidance on reconciling your stimulus check payments with your taxes.
Use IRS Letter 6475, Your Third Economic Impact Payment, to calculate the amount of your 2021 stimulus check money. In early 2022, it was mailed to recipients. It covers the entire amount of your stimulus check, as well as any “plus-up” payments.
The payment of all stimulus checks came to a stop on December 31, 2021. You must claim the Recovery Rebate Credit on your 2021 tax return if you did not receive a stimulus payment last year or received less than you were qualified for.
Continue reading to find out how to record your 2021 stimulus check payments correctly on your tax return. including what to do if you didn’t receive or misplaced Letter 6475, or if the IRS says it paid you stimulus money.
For more information, see how parents can take advantage of the enlarged child tax credit, as well as the most significant tax changes for this year and how to submit your taxes for free.
What was the purpose of IRS Letter 6475?
The IRS stated in a January release that “the Economic Impact Payment letters include important information that can help people quickly and accurately file their tax return,” including personal information such as your name and address, as well as the total amount sent in your third stimulus payment.
This might include “plus-up” payments, which are extra monies provided by the IRS to persons who were qualified for a higher amount based on their 2019 or 2020 tax returns, or information from the Social Security Administration, Department of Veterans Affairs, or Railroad Retirement Board.
You may have already gotten a Letter 1444-C, which details the amount you were paid and how it was delivered, but you won’t need it to file your 2021 tax return.
What should I do with the letter from the stimulus fund?
If you’re working with a professional tax preparer, provide Letter 6475 together with all other relevant tax paperwork. If you’re doing your own taxes, use the amount in Letter 6475 in the Recovery Rebate Worksheet to see if you qualify for a credit. Then, on IRS Form 40, Line 30, insert that credit.
The Recovery Rebate Worksheet is found in the IRS Form 1040 instructions and is calculated automatically by tax software.
According to the H&R Block website, “having the erroneous amount on your return could trigger a manual review,” which could cause a refund to be delayed for weeks.
How can I find out if I’m eligible for further stimulus funds?
In 2021, the majority of Americans received their full stimulus checks, but there are a few reasons why you may not have received as much as you are entitled to. Specifically, if you had a new baby or added qualifying children to your household in 2021, you’ll be entitled to an additional $1,400 per child. Similarly, if your income dropped significantly last year, you may owe more money.
If you believe you are entitled to more stimulus money than you received in 2021, the best tax software will automatically compute your recovery rebate credit and add the amount to line 30 of your IRS Form 1040.
Use the Recovery Rebate Credit Worksheet as recommended in the IRS instructions for Form 1040 if you want to calculate your potential recovery rebate credit yourself.
What if I never received or misplaced Letter 6475?
The IRS did not send you Letter 6475 if you never received a third stimulus check. If you were qualified but did not get a payout in 2021, you can claim the recovery rebate tax credit on your 2021 tax return to receive that money now.
If you received a third stimulus check but never received Letter 6475 or misplaced it, you can use your online IRS account to look up the number of your economic impact payments. After logging in, go to View Tax Records and then to Economic Impact Payment Information and click the plus symbol next to 2021.
If you and your spouse are married and filing a joint tax return, you and your spouse must both go into your online IRS accounts and sum the amounts of your contributions to compute your total stimulus check payments for 2021.
What if Letter 6475 states that I received money when I actually did not?
To begin, the IRS advises that you double-check your bank account data for the year 2021. They recommend keeping an eye out for IRS deposits in the spring and early summer.
Check your IRS account online next. Particularly if a payment was returned, the information on the IRS website will be more up to date than Letter 6475. If your online account indicates that you received stimulus payments but have yet to receive the funds, you should contact the IRS right once to see if a payment trace is required.
What if I made a mistake when reporting my stimulus funds?
Do not file an amended return if you’ve already filed your 2021 tax return and discovered that you reported incorrect information for your stimulus check payments. According to the IRS, it will remedy any errors and send you a notification detailing the modifications made to your return.
Even if you don’t need to file an updated return, making a mistake when reporting stimulus money will cause your return to be processed and any prospective tax refund to be delayed. As previously stated, one of the leading causes of IRS delays last year was stimulus payment problems.
If you submitted your 2021 tax return and reported $0 for your recovery rebate credit, you will need to file an amended return using IRS Form 1040 X if you want to claim more stimulus money.
Is it necessary for me to maintain Letter 6475 after I file my taxes?
According to Mark Steber, chief tax information officer at Jackson Hewitt, you should always keep tax return-related documents: “In case something comes along in the following two or three years,” he says, W-2s, interest statements, and IRS letters are good records of your account.
All papers related to income, deductions, credits, and other tax items should be kept for at least three years, according to the IRS.