The relief money issued by the federal government is not subject to tax. If you receive a letter from the IRS, don’t throw it away. (Photo is from Associated Press)

(We Chinese in America Media Editor Tang Zhao January 9, 2022)  To assist taxpayers in filing last year’s federal income tax, the Internal Revenue Service (IRS) plans to send a letter related to the third bailout check issued by the government in 2021 starting later this month; the public is expected to receive this letter in the next few weeks. Don't be surprised when the time comes, and don't discard this letter.

The IRS press release stated that the letter labeled "Your Third Economic Impact Payment" No. 6475 will specify the bail-out amount received in 2021 and any additional payments (plus-up payments); "These letters can assist taxpayers or their tax professionals to prepare 2021 federal tax returns."

Taxpayers can use it to determine whether they can apply for a "recovery rebate credit" when they file their 2021 tax bill. If they are eligible for the third bail-out payment, but the actual amount received is different from the amount stated on the above IRS letter, this credit can be used to make up the difference.

There is no tax deduction for bail-out cheque income, but it still needs to be declared in the 2021 tax return.

The 2021 relief check has been issued to eligible recipients since March last year. Eligible people and each family member can receive as much as $1,400 in relief funds; if those who are eligible for the issuance but do not receive relief funds, or changes in personal status, such as giving birth to a child in 2021, may also be eligible for more bailout money.

At the same time, many families may have received or will soon receive another letter regarding the 2021 Child Tax Credit (CTC). Letter No. 6419 will contain important information about CTC payments; for example, how much money the whole family has received in advance, and how many eligible children are credited to the account each month.

The IRS stated that “family receiving these advance payments should check the amount of advance payment they received in 2021 with the child tax credit mentioned in the letter from the IRS in order to declare the correct amount in 2021.”

Eligible families who have not received the advance payment can claim this amount when paying taxes this year.

(Source: World Journal)