With 2022 beginning, taxpayers have started gathering all of their 2021 tax documents they need to file a return.
This year, refunds may end up being a bit smaller than what people are typically used to.
The IRS is sending taxpayers a Letter 6419 and Letter 6475 that will help them file their taxes correctly if they received the child tax credit or stimulus payment in 2021.
Here are a few reasons your tax refund might be smaller than before
If you received child tax credit payments
Letters began going out to families who received child tax credit payments during 2021.
If you’re expecting a letter but have not received one, they are still being sent through January.
Anyone who received payments but does not normally file taxes, will need to this year.
If it’s determined that you received too much due to your child’s age or your income, you’ll owe it back to the IRS.
#IRS sending letters to recipients of advance #ChildTaxCredit payments and third #EconomicImpactPayments. Using the information in these letters when preparing your tax return can reduce errors, avoid refund delays. https://t.co/86X3GiVvCl pic.twitter.com/jGaGcFMqcQ
— IRSnews (@IRSnews) January 6, 2022
Stimulus checks may diminish your tax refund
Letters for anyone who received a stimulus check in 2021 will receive a letter with details in late January.
The third stimulus check was issued between March 2021 and Dec. 2021.
The letter will detail any stimulus payments you received, including any plus up payments.
If you did not receive stimulus payments but believe you qualified, you may claim the recovery rebate credit on your 2021 tax return.
Student loans could impact what you get back, or owe the IRS
Student loan repayments were paused until Jan. 31, 2022.
Recently, that pause was extended to May 1, 2022.
Interest rates will remain at 0% until repayments begin.
This means you cannot write off student loan interest on your taxes because there hasn’t been any for all of 2021.
Before, borrowers could deduct up to $2,500.