The tax agency is mailing out forms to taxpayers in either situation: Letter 6475 for economic impact payments, and Letter 6419 for the CTC. Each shows the total amount of money recipients got for that tax break.
The IRS started issuing CTC payment letters in December and said it will continue sending more through the first part of the new year, while stimulus letters will begin arriving at the end of January.
If you receive either or both IRS letters, keep them in a safe place. These documents will be critical when you're filing your taxes this year, says Mark Prendergast, a CPA and CFP, and the director of tax strategies at Inspired Financial in Huntington Beach, California.
Without the proper filing information, "people are just going to do it erroneously," he says. "Much like, when they gave the first stimulus payments, people put wrong numbers on their tax return form."
Here's what to look out for that could be coming this winter from the IRS.
The six advance payments, disbursed monthly from July to December as part of the Biden administration's $1.9 trillion American Rescue Plan, added up to as much as $1,800 per child. That accounts for just half the total eligible families can receive for the expanded CTC, though.
You'll need the form to show what you've gotten so far and to ensure you get the right amount in the second installment.
The remaining portion of the credit will be applied when you file 2021 taxes this spring. You'll need the information on your Letter 6419 when filling out Schedule 8812 (and Form 1040) in order to determine how much more money you are eligible to receive.
If you don't see your Letter 6419 form soon, you can check how much of the enhanced Child Tax Credit you've revived already using the IRS CTC update portal. The full credit is worth up to $3,000 for children ages 6 to 17 and up to $3,600 for those who were under the age of 6 in 2021.
Filing a tax return is the surest way to get your payment, adds Prendergast. "Most of these people really need the money. So if they don't address their tax filing when they can, they will only end up harming themselves."
A third round of stimulus payments, also part of the American Rescue Plan, was sent out in March 2021, and individuals received up to $1,400 each. As of July, the IRS said it sent more than 171 million payments to Americans, totaling $400 billion.
People who didn't get their last payment, or who didn't receive the full amount, ought to hold on to their Letter 6475 forms ahead of the 2021 tax filing season, since that information could help square up any errors.
Video by Jason Armesto
Since eligibility for the 2021 checks was determined using 2020 or 2019 tax returns, you could get more money at tax time if your income dropped and you didn't initially get the full amount. Those missing funds will either be applied to taxes owed to lower your bill or will be returned in your refund.
You can claim your funds on your 2021 tax return by using the Recovery Rebate Credit. Your Letter 6475 will include a record of any economic impact money sent, any funds still due, and other necessary information to determine how much you could receive.
The Biden administration introduced new framework recently for its $1.75 trillion Build Back Better proposal, which aims to extend the Child Tax Credit through 2022, as opposed to the originally proposed 2025 end date.
Under that new proposal, the benefit would stay fully refundable and generate a tax refund if its value exceeds what you owe, the White House said in a statement, "meaning, that the neediest families will continue to receive the full Child Tax Credit over the long run."
Fourth stimulus checks, on the other hand, aren't currently expected.
This information is being provided for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal, or tax advice. You should consult your accountant, tax, or legal advisor regarding such matters.
More from Grow: