Filing 2021 Tax Returns: What to expect

Before you file your 2021 tax return, make sure you have the two letters the IRS mailed out to everyone that received the third stimulus check (issued March-December 2021) and the advanced child tax credit payments (issued July-December 2021).

People who received the third stimulus check, officially called the 2021 Economic Impact Payment, will receive Letter 6475 from the IRS. This will help them determine if they received the EIP or if they should claim the Recovery Rebate Credit on their 2021 tax return that they file this spring.

"Letter 6475 only applies to the third round of Economic Impact Payments that was issued starting in March 2021 and continued through December 2021," the IRS said on its website. "The third round of Economic Impact Payments, including the 'plus-up' payments, were advance payments of the 2021 Recovery Rebate Credit that would be claimed on a 2021 tax return.

Plus-up payments were for people who may have received their EIP after the IRS received updated eligibility information about them.

Americans who received the monthly child tax credits will be receiving Letter 6419.

The IRS said this will tell eligible families how much of the credit they received in advance monthly payments in 2021 and the number of qualifying children used to calculate that amount. That will let them figure out how much of the tax credit to claim on their tax returns.

Although it has always been a test of patience to contact the IRS, you can expect the same this tax filing season. The IRS was experiencing staffing challenges in their call centers prior to the pandemic. The pandemic put more strain in this area which impacted the nation in resolving tax related issues with the IRS. The call centers are understaffed and answering 40% of the calls they are receiving. The backlog of processing payment arrangements, paper returns, amendments, etc. is still being worked through given the additional workload of issuing stimulus payments and advanced child tax credit payments. The increase in call volume has impacted the tax professional priority line to the point tax professionals are paying for robots to hold their place in line.

Brace yourselves and have grace with your tax professionals as we are all in this together.

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