Tax Prep Question (Stimulus Related)

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Blues
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Tax Prep Question (Stimulus Related)

Post by Blues »

I understand that when preparing the 2021 return, the exact amount of stimulus funds received is required.

However, I know that our bank received the payment declared at the end of December 2020 during the first week of January, 2021, January 4 as my records indicate...and in March, another stimulus payment was direct deposited.

My question is, and I haven't found the answer online, is whether the payment declared in December but received the first week of January, 2021 is included or not for 2021? (Or was it considered with the 2020 total?)

I seem to recall a question about whether we received both payments for 2020 on last year's tax prep. Hence my uncertainty.

Thanks in advance for any clarity you might provide.
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jebmke
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Re: Tax Prep Question (Stimulus Related)

Post by jebmke »

You will get a letter from the IRS in late January that will give you the exact amount. If your return doesn't use that amount, it will most likely get kicked to a manual process which could take months. They are still sitting on many returns filed last year where the rebate credit section of the return doesn't reconcile.

Also, in case it applies, there will also be a letter which provides the exact amount of the Advanced Child Tax Credit paid in 2021. The same reconciliation challenge applies.

I would wait to get that letter (letters) before doing anything other than preliminary entries for a tax return.
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PaunchyPirate
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Re: Tax Prep Question (Stimulus Related)

Post by PaunchyPirate »

There have been 3 stimulus payments.

Payment 1 (CARES Act - 2020) = Max $1200 per person
Payment 2 (Consolidated Appropriations Act - Very late December 2020, so most paid in 2021) = Max $600 per person

These first 2 payments were to have been reconciled on your 2020 tax return, no matter when you actually received the payment. There was a line on the tax return to claim any payment you did not get automatically.

Payment 3 (American Rescue Plan - March 2021) = Max $1400 per person

This third payment is to be reconciled on your 2021 tax return.

As jebmke indicates, the IRS says they will be sending letters about this in January. You can also sign into your IRS online account and view stimulus payment information.
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Blues
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Re: Tax Prep Question (Stimulus Related)

Post by Blues »

PaunchyPirate wrote: Fri Jan 14, 2022 9:18 am There have been 3 stimulus payments.

Payment 1 (CARES Act - 2020) = Max $1200 per person
Payment 2 (Consolidated Appropriations Act - Very late December 2020, so most paid in 2021) = Max $600 per person

These first 2 payments were to have been reconciled on your 2020 tax return, no matter when you actually received the payment. There was a line on the tax return to claim any payment you did not get automatically.

Payment 3 (American Rescue Plan - March 2021) = Max $1400 per person

This third payment is to be reconciled on your 2021 tax return.

As jebmke indicates, the IRS says they will be sending letters about this in January. You can also sign into your IRS online account and view stimulus payment information.
This is my understanding as well, as I recall having to "answer" regarding the two 2020 payments when I prepared our taxes last year.

So, my "thought" was that only the March, 2021 payment would be relevant for this return...but, having worked for the government for 27 years, I know what "assumptions" are worth. Hence the question...in an abundance of caution.

Thank you all.
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secondcor521
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Re: Tax Prep Question (Stimulus Related)

Post by secondcor521 »

PaunchyPirate wrote: Fri Jan 14, 2022 9:18 am As jebmke indicates, the IRS says they will be sending letters about this in January. You can also sign into your IRS online account and view stimulus payment information.
My understanding regarding the notifications from the IRS is slightly different.

For stimulus payments, a person should have received a Form 1444-C regarding the third stimulus payment a few weeks after the payment was sent. In OP's case, they should have received the 1444-C in the mail around the April time frame.

The letters that the IRS will be sending out in January relate to the Advance Child Tax Credits that were generally paid in the second half of 2021 to eligible taxpayers. This will be a 6419 letter.

I do agree that the taxpayer should be able to log into their IRS account to get either or both of these amounts, as necessary. If married, both taxpayers should look for letters or notices and both should check their IRS account.

...

OP, I agree with the others that you will only need to deal with the March payment on your 2021 return. The January 2021 payment should have been dealt with on your 2020 return.
Asyouwish
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Re: Tax Prep Question (Stimulus Related)

Post by Asyouwish »

In addition to the CTC letters, there is supposed to be another stimulus letter.


https://www.cnbc.com/2022/01/08/what-to ... e-irs.html

Letter 6475, “Your Third Economic Impact Payment,” the correspondence will include how much you received in stimulus money in 2021, including any so-called plus-up payments.

I personally have not gotten a letter yet. I did get the White House letters.
jebmke
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Re: Tax Prep Question (Stimulus Related)

Post by jebmke »

This is what I received on my automated IRS Tax Tips from the IRS.
The IRS will begin issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter will help Economic Impact Payment recipients determine if they are entitled to and should claim the recovery rebate credit on their 2021 tax returns when they file in 2022.

Letter 6475 only applies to the third round of Economic Impact Payments, which were issued in March through December of 2021. The third round of Economic Impact Payments, including "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 additional payments the IRS sent to people who received a third Economic Impact Payment based on a 2019 tax return or information received from the Social Security Administration, Railroad Retirement Board or Veterans Affairs. Plus-up payments were also sent to people who were eligible for a larger amount based on their 2020 tax return.

Most eligible people already received the payments. However, people who are missing stimulus payments should review information on IRS.gov to determine their eligibility and whether they need to claim a recovery rebate credit for 2020 or 2021. This includes people who don't normally need to file a tax return.

The Economic Impact Payment letters include important information that can help people quickly and accurately file their tax return
It isn't clear if the letter will show the amount. But there isn't a compelling reason not to wait and see what it says. One thing for sure, if the return doesn't reconcile, it will likely get kicked to a manual review and likely delay your processing.
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Blues
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Re: Tax Prep Question (Stimulus Related)

Post by Blues »

I think we're making this a bit over complicated.

First off, if it was direct deposited, as ours were, (or you keep a check book), it should be easy enough to verify with bank statements online, or the checkbook. I verified with both to make sure I recalled correctly what we had received, and when.

My only confusion, if you may call it that, was whether or not the money received during the first week of January was already accounted for on the prior year's, (2020), return...as I recall having had to answer that I'd received both payments previously.

That was it. Nothing more.

I was not wondering whether or not we received payments, or the amount of the payments...only whether I'd need to combine the January and March amounts, since both were received in calendar year 2021.

I think that's been addressed in the manner I had expected it to be.

So, thanks again.
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Blues
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Re: Tax Prep Question (Stimulus Related)

Post by Blues »

FWIW, even though the federal returns weren't supposed to be accepted until January 24...I just got a notice that the return I submitted earlier today was already accepted.

This also validates that the only payment to be accounted for was the one from March of 2021 (or later). (The tax software explained this during the Q&A as well...)

So, thanks again. :sharebeer
“Tactics without strategy is the noise before defeat.” - Sun Tzu | "Everybody has a plan until they get punched in the mouth." - Mike Tyson
Katietsu
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Re: Tax Prep Question (Stimulus Related)

Post by Katietsu »

Blues wrote: Wed Jan 19, 2022 4:47 pm FWIW, even though the federal returns weren't supposed to be accepted until January 24...I just got a notice that the return I submitted earlier today was already accepted.

This also validates that the only payment to be accounted for was the one from March of 2021 (or later). (The tax software explained this during the Q&A as well...)

So, thanks again. :sharebeer
You sort of filed your return. The third party tax software companies were permitted to start accepting returns on January 14. They can not transmit them to the IRS until January 24. The downside to this is that many taxpayers who are waiting on a refund think there is a chance that their return is currently being processed when it is not.
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Blues
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Re: Tax Prep Question (Stimulus Related)

Post by Blues »

Katietsu wrote: Wed Jan 19, 2022 4:52 pm
You sort of filed your return. The third party tax software companies were permitted to start accepting returns on January 14. They can not transmit them to the IRS until January 24. The downside to this is that many taxpayers who are waiting on a refund think there is a chance that their return is currently being processed when it is not.
No, they always inform me that the return is being held until the IRS accepts the return...at the point that I upload it to them. Sometimes that wait is days.

I received a specific reply saying that the return was accepted by IRS. (I do not mean to imply that it was reviewed and the refund already approved.)

This isn't my first rodeo. Anyway, here's a direct quote. This is not the same as when they confirm receipt of the return...and it is pending acceptance.
The IRS has accepted your tax return.

Since you chose direct deposit, the IRS states that most refunds will be processed in less than 21 days. In our experience, however, most people receive their refunds in 7 to 14 days. You can check the status of your refund by using the IRS Refund Tool within the next 24 hours.

You can sign in to your account to view your acceptance information, print a copy of your tax return for your records, or correct (amend) your return, if needed. You should be able to amend/correct your return starting in early February.
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Asyouwish
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Re: Tax Prep Question (Stimulus Related)

Post by Asyouwish »

The IRS always does a test run. Some returns are accepted early as part of the test batch. So yes it’s possible to be in the early batch before official opening day of January 24.
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Blues
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Re: Tax Prep Question (Stimulus Related)

Post by Blues »

Asyouwish wrote: Wed Jan 19, 2022 5:21 pm The IRS always does a test run. Some returns are accepted early as part of the test batch. So yes it’s possible to be in the early batch before official opening day of January 24.
Exactly. Thank you. 8-)
“Tactics without strategy is the noise before defeat.” - Sun Tzu | "Everybody has a plan until they get punched in the mouth." - Mike Tyson
bluegill
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Re: Tax Prep Question (Stimulus Related)

Post by bluegill »

If I recall correctly, TaxSlayer asks "Did you recieve QIP3 ?"
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