Sun City Community Assistance Network offices received numerous calls from residents concerned about a recent correspondence from the Internal Revenue Service.
Starting in September the IRS sent out “Letter 6470.” The purpose of this letter is to explain taxpayers’ rights, but many people panic upon receiving any correspondence from the IRS.
The Recovery Rebate Credit was enacted last year and provided some taxpayers an immediate payment of $1,200 around April or May 2020 and a $600 payment around December 2020 or January 2021. The amounts for married filing joint returns was $2,400 and $1,200.
To authorize these payments, Congress created a refundable credit for the 2020 tax return and these represented prepayments on this refundable credit. It was generally based on the 2019 return.
When taxpayers were having their 2020 tax return prepared they needed to indicate on this return if they received one or both RRCs. Many did not know, so they filed a return indicating that one or both RRCs were not received. When the IRS processes the returns they check to see if the RRCs were in fact paid or not. When the IRS finds that the payment was made, they will deny the refund request on the tax return.
The Letter 6470 is then sent explaining that the RRC has been changed and provides the taxpayer with a method of appealing. If a recipient of this letter finds that they had in fact received the RRC, then there is nothing they need to do. If they had not received the RRC they can then follow the instructions in this latter to preserve their appeal rights.
Editor’s Note: Jim Graff is AARP Tax-Aide coordinator for Sun City.
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