Heads up, Outsiders! Keep an eye out for a letter from the Internal Revenue Service (IRS) labeled “Letter 6475.” It could be the key to additional stimulus money.
The letter is going out to roughly 36 million households. And it explains how to file your 2021 tax return so that you get the full amount of stimulus payment to which you are entitled.
The Economic Impact Payment letter will go out in late January. It provides some useful details about the recovery rebate credit that some people are eligible to claim on their 2021 tax returns when they file in 2022. The recovery rebate credit is the difference between the amount of the third stimulus payment you were eligible for and the amount you received.
The IRS said in a statement that most eligible people already received their payments. But Economic Impact Payment letters have info that will help taxpayers file their tax returns accurately.
IRS Letter Explains Economic Impact Payments
The letters concern the third round of Economic Impact Payments. Those went out between March and December of last year. The third round of payments included “plus-up payments,” and they were advance payments from the recovery rebate credit that taxpayers could claim on their 2021 tax returns.
The “plus-up payments” from the IRS went out to two groups of people. The first was people who got a third Economic Impact Payment due to their 2019 tax return, or due to information from the Social Security Administration, the Railroad Retirement Board or Veterans Affairs. The second was people whose 2020 tax return entitled them to a larger payment.
If you feel you are missing a stimulus payment, check IRS.gov. That should help you gauge your eligibility for a recovery rebate credit for either 2020 or 2021. Even if you don’t normally need to file a tax return, you may be eligible for more stimulus money.
Internal Revenue Service Workforce Is Slowly Shrinking
Meanwhile, if Letter 6475 and the prospect of additional stimulus isn’t reason enough for you to file your tax return, the IRS’s enforcement mechanism should be.
The IRS’s workforce has been shrinking over the past two decades. And partially as a result, it has been forced to outsource tax collection to private collection agencies, Forbes reports.
In 1995, the IRS had a workforce of 113,643. By 2010, that was down to 94,711. At the close of 2019, the IRS had 74,369 employees.
That decline in staffing levels may have been what moved Congress to include in the Fixing America’s Surface Transportation (FAST) Act of 2015 a provision requiring the IRS to use private collection agencies to collect taxes. Now, if you fail to pay your tax in full when you file your tax return, you get a bill from the IRS that kicks off the collection process. People who fail to pay taxes voluntarily face consequences ranging from tax liens to lost refunds.
So, tempting as it may be to toss that jargon-filled letter from Uncle Sam, hold onto it. And don’t forget to file your tax return this year.