2021 Advanced Child Tax Credit Payments: What You Need to Know | Paul Pahoreskey | Business

The US Rescue Planning Act, signed by President Biden on March 11, 2021, was enacted to help American individuals and businesses recover from the coronavirus pandemic. This includes an enhanced child tax credit starting in July of this year with direct payments to eligible American families.

The actual payment to the qualified taxpayer is scheduled to begin in July. These payments are for 2021 only and will depend on whether your child is under 6 years old or older.

Credits and corresponding payments are $ 300 per child for children under 6 years of age. Children over the age of 6 will be reduced to $ 250 per child. Taxpayers must adjust their total income to less than $ 75,000 for a single filer and less than $ 150,000 for a couple to file together to receive the full $ 300 for each child tax deduction. there is.

For taxpayers who exceed these amounts, additional tax incentives will begin to be phased out. Credits will be completely phased out for individual taxpayers with adjusted total income of more than $ 95,000 and couples who earn $ 170,000 and file jointly.

Adjusted total income taxpayers who exceed these thresholds will have a regular $ 2,000 per child if they meet the higher income limits of the regular child tax credit for children under the age of 17. You can get a tax credit. A regular child tax credit raises the adjusted total income threshold, which is $ 200,000 for individual tax filers and $ 400,000 for joint tax returns.

The purpose of the enhanced child tax credit is to put the greatest tax benefits in the pockets of those with the lowest family income.

The IRS will issue prepayments for child tax credits on July 15, August 13, September 15, October 15, November 15, and December 15.

How you receive your payment depends on how you received your previous stimulus payment. Most taxpayers receive these child tax credit payments through direct deposits. The IRS also sends paper checks and debit card funds.

Most families do not have to do anything or take action to get paid.

The IRS trusts the 2020 tax return if it is filed. If no 2020 returns have been submitted, the IRS will use the 2019 returns information.

The IRS has established a link to submit information so that non-filers can obtain and register information about child tax deductions.

Taxpayers can also opt out of receiving monthly prepaid child tax credits. Alternatively, you can opt for a one-time payment of $ 3,600 for children under the age of 6 and $ 3,000 for children aged 7-17. Tax return.

The IRS provides a portal for these taxpayers to opt out of receiving monthly payments and choose to receive the full amount as part of their tax payments and their corresponding tax refunds.

If the IRS overpays you for a child tax credit payment, the rules are not as flexible as for exciting payments. When you file your 2021 tax return in early 2022, you will need to repay the overpayment if your tax status has changed from what is on the IRS record and you are not entitled to receive it.

This is important to note for taxpayers who have joint custody arrangements and who alternately charge their children from one year to the next.

This current child tax credit law is in force until the end of 2021. Congress is moving to extend this enhanced child tax credit beyond the end of the year. For now, if you receive an unexpected check or direct deposit from the Internal Revenue Service, you may have a child tax credit.

2021 Advanced Child Tax Credit Payments: What You Need to Know | Paul Pahoreskey | Business

Source link 2021 Advanced Child Tax Credit Payments: What You Need to Know | Paul Pahoreskey | Business

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