General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsChild Tax Credit Notice from My Accountant
.
Passing this along. My kids are all adults now.
Recently, there were changes made to the child tax credit that will benefit many taxpayers. As part of the American Rescue Plan Act that was enacted in March 2021, the child tax credit amount has increased for certain taxpayers, is fully refundable (meaning you can receive it even if you do not owe the IRS), and may be partially received in advance through monthly payments. These tax changes are temporary and currently only apply to the 2021 tax year.
The IRS will pay half the credit in the form of advance monthly payments beginning July 15. Taxpayers will then claim the other half of this credit when they file their 2021 income tax return. Taxpayers generally will not need to do anything in order to receive these advance payments as the IRS will use the information it has on file from your 2019 or 2020 tax return to start issuing the payments.
The child tax credit is normally part of your income tax return and would reduce your tax liability. The choice to have the child tax credit advanced will affect your refund or amount due when you file your 2021 tax return. Using the IRSs Child Tax Credit and Update Portal, you have the option to opt out of the advance monthly tax credits. You must have an existing IRS.gov log in, or create an account in order to access such information.
Qualifications and How Much To Expect
The child tax credit and advance payments are based on several factors, including the age of your children and your income.
The credit for children ages 5 and younger is up to $3,600 with up to $300 received in monthly payments.
The credit for children ages 6 to 17 is up to $3,000 with up to $250 received in monthly payments.
You can take full advantage of the credit if your income (specifically, your modified adjusted gross income) is less than $75,000 for single filers, $150,000 for married filing jointly filers and $112,500 for head of household filers. The credit begins to phase out above those thresholds. Higher-income families (e.g., married filing jointly couples with $400,000 or less in income or other filers with $200,000 or less in income) will generally get the same credit as prior law (generally $2,000 per qualifying child) but may also choose to receive monthly payments.
The IRS provides answers to frequently asked questions about the new 2021 Child Tax Credit and Advance Child Tax Credit Payments. Should you have any other questions please do not hesitate to contact our office to discuss your specific tax situation.
Child Tax Credit Update Portal: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal
2021 Tax Credit FAQs: https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-frequently-asked-questions
.
Wounded Bear
(58,604 posts)Oh well, she can use it now for my grandkids.
SYFROYH
(34,163 posts)And that there aren't any new dollars being given to families?
We're just distributing half of the tax credit over the next 6 months instead of distributing the whole credit as a lump sum in the 2021 tax return?
I know there are people who need that cash now, but I worry that they'll be hit when they do their taxes. Owing the IRS can be a big problem.
Or maybe I don't understand everything at play here.
Igel
(35,275 posts)The child tax credit's larger this year. I think for my kid it's doubled. And it's not really a "tax credit"--it doesn't just count against taxes owed, but contributes to any refund. Hence "refundable."
By getting the money in July-December you will get less back in April-May than you otherwise would. On the other hand, most people didn't factor this amount into their withholding amount so it probably won't affect much come spring filing time.
The IRS site was supposed to, by the end of June, have an opt-out mechanism live on their web page so you could tell the IRS not to send you the monthly portions for the last half of the fiscal year. I tried to use it, but I could never get my ID validated by any of the three options--apparently it doesn't like my phone number, for some reason. In any event, I assume that the actual process works once you get signed in to the irs.gov site properly.
themaguffin
(3,822 posts)ultimately part of some delayed thing that might impact my taxes next year.
We may get the checks, but I hope not.
SYFROYH
(34,163 posts)questionseverything
(9,645 posts)The old child tax credit was $2000.
Now it is $3600. For children five and under
$3000. For 6-17