Previously, we had shared with you some of the major changes to personal and businesses taxes to set you up for success this season. You may have noticed that, to benefit from some of the credits and deductions mentioned formerly, special documentation is required in the form of letters sent from the Internal Revenue Service.
There is real money on the line and potential penalties on the horizon associated with this process. So, we can’t overstate how important it is to acquire the appropriate letters and related requirements. You cannot organize what you do not have, nor can we manage this all-important function as your partners in all things tax and accounting. Likewise, you do not want to leave checking on these items to the last minute. The risk of errors or incomplete information goes up considerably when you do a “rush job.” Plus, you simply won’t have the supporting information to minimize your tax burden with the credits and deductions that are due to you and that you or your household qualifies for.
Now that you are taking a moment to read this, also pause to check for the following or double-check that the below documents arrived as intended:
Child Tax Credit Letter 6419 – This document is necessary to account for child tax credit payments. The IRS paid 50% of the projected payments to qualifying taxpayers. You should have the letter in hand by now. But, if you don’t, contact the Internal Revenue Service’s telephone assistance line at 800-829-1040. You can also search for your local IRS taxpayer assistance center office number. Simply enter your ZIP code here. If you have received the letter, confirm that the dollar amounts as noted are correct. Or, you can check that the info is accurate by identifying the most up-to-date amounts on your online account. The IRS has provided a guide to walk you through setting up and accessing your account. Features include viewing tax records, making payments, creating payment plans, viewing amounts owed (with breakdowns by tax year), among other capabilities and functions.
Stimulus Payment Letter 6475 – As with the child tax credit document, this letter is necessary to support and confirm any stimulus payments (including plus-up payments) that you received in 2021. This supporting documentation is necessary to properly report any of the economic impact monies that were received, as well as to determine if you are eligible for more monies and to claim the Recovery Rebate Credit. As with Letter 6419, this notification should have been received in your mailbox by now (as of late January). A delay could potentially mean there is an issue; for instance, see the next bullet point to assure all contact details are current and correct.
Identifying information – It’s critical to confirm that the IRS has the most up-to-date information on file from you. This may include any changes to your address or name. There are several channels to go through to remedy this issue. Additionally, tax-related identity theft has increasingly reared its ugly head. There are a number of safeguards to prevent someone from stealing your personal info and then using it to file a tax return, thus claiming a fraudulent refund; for instance, there are IRS Identity Protection PINS, a six-digit number known only to you and the IRS. As long as you can verify your identity, you are eligible for this pin through a rigorous Secure Access authentication process. Additional precautions and “red flags” that you may have been a victim of this type of ID theft can be found here. It should be noted that you may also receive a notice or letter that seems “off” or looks suspicious. If that’s the case, you may be a target for a scam. It bears repeating that the real IRS will not contact you by channels such as email, text or social accounts to solicit personal or financial information. The IRS also provides substantial information on what the letters look like and what to watch for. So, you can confirm that the communication is authentic or that there is a good reason the notice smells fishy!
Sniffing out errors – Check for errors with any tax forms that you’ve received. The error should be communicated and a correction version must then be completed and mailed to both you and the agency. For instance, it’s possible that your W-2 form may feature incorrect wages or tax withholding figures. Likewise, there may be investment forms (1099-INT or 1099-DIV) that require revisions associated with interest/dividend income. Lastly, don’t forget to check the likes of Form 1099-NEC (as needed, for non-employee compensation) and Form 1098 to assure the interest that you’ve paid on your mortgage or student loans, as needed, is correct and properly and promptly revised. Be sure to keep both the original form and the corrected one for reference and complete records.
Full and accurate information is the backbone of a successful tax season. Take it from us, we know! After all, we are your tax partners, and it’s not just a season to us – it’s a year-round effort. Perceiving the process as such saves a lot of grief and sleepless nights as deadlines approach.