Don't panic if a letter from the IRS unexpectedly shows up in your mailbox this month. Tons of Americans are getting them — and the message inside (probably) has nothing to do with an audit.
Starting in late January, the IRS is sending out letters to recipients of the third Economic Impact Payment, aka the COVID-19 stimulus check that went out last year. The notes are intended to help recipients "determine if they are entitled to and should claim the recovery rebate credit on their 2021 tax returns when they file in 2022," according to a recent news release.
It can be confusing, so let's recap. Congress has approved three stimulus checks since the coronavirus pandemic began. The first payment was a maximum of $1,200; most people got it in April 2020. The second was $600; most people got it in December 2020. The third was $1,400; most people got it in March 2021.
In order to make the stimulus checks work from a tax perspective, the government technically had to structure them as advance payments on fully refundable tax credits. As such, the third stimulus check is linked to the 2021 Recovery Rebate Credit.
Though stimulus checks are not taxable income, you'll still have to report the money you received on your 2021 taxes — the ones you'll file this spring. If you didn't receive the entire third stimulus check and you think you qualify for more, you can also reconcile that on your taxes.
What is IRS Letter 6475?
This is where the new IRS letter — officially known as Letter 6475 — comes in. The letter will include information about your third stimulus check and any plus-up payments you got so you can put accurate numbers on your tax return. For this reason, the IRS news release recommends not throwing Letter 6475 away.
"People receiving these letters should keep them," it adds. "These letters can help taxpayers or their tax professional prepare their 2021 federal tax return."
The IRS also began sending out letters in December concerning the child tax credit. Letter 6419 includes information about how many qualifying kids your family has and, if applicable, the amount you received in advance payments. Hang on to this note, too — you'll need it for your taxes.