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  • Child Tax Credit: How Do I Get The Child Tax Credit Advanced Payment? And other important things to know

    Child Tax Credit: How Do I Get The Child Tax Credit Advanced Payment? And other important things to know

    Beginning in July 2021, eligible taxpayers will be receiving up to $300 advanced monthly payments of the child tax credit. The advanced credit is based on parents with eligible children. The advanced credit is reconciled against eligibility when they file their 2021 tax return.

    What do you have to do to get the payment?

    The short answer is nothing! Though, is anything with taxes ever that simple? If you have filed your 2020 tax return, and 2021 hasn’t brought significant changes to your family, income, or bank information, then you are in the best position for receiving the advanced credit.

    If any of these situations are a close match to your situation, check the FAQ below for quick answers to questions you may have: 

    • Did not file 2020 taxes, or 2019? 
    • Changes to your income or bank information? Do you want direct deposit?
    • Prefer to not get the payments?
    • How do you know if you qualify? How much can you expect?

    A few things to lookout for

    The IRS will have a portal (not yet active) to check the status of your payment and update information they have recorded. Tools will be made available by the IRS to determine your eligibility and estimated payment amounts.

    Direct information about these changes can be found on the IRS's page on the Advanced Child Tax Credit: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

    The IRS will send eligible taxpayers two letters. You may have already received the first letter which outlines the program and your possible eligibility. The second letter will address your specific situation and the amounts for your child tax credit. Either of these letters will contain information on the opt-out option.

    A little background on the advanced payments

    Changes to the Child Tax Credit came about in the American Rescue Plan Act of 2021, increasing the maximum amount of the credit, generating payment in advance of tax time and increasing the fully deductible portion.

    • Amount increased to $3,600 for children five and under at the end of 2021
    • Amount increased to $3,000 for children between six and 17 at the end of 2021
    • 50% of the estimated allowable credit will be paid in monthly installments beginning in July, 15 and continuing through December.
    • The credit is fully refundable, previously only $1,400 of the $2,000 was refundable.

    What are the limitations?

    • These changes are for the tax year 2021 only
    • The tax credit is an advance against your 2021 tax credit. This means that your child tax credit on your 2021 tax return will be reduced dollar for dollar for any amount received in advance.
    • Depending on your Modified Adjusted Gross Income (MAGI), you may not be eligible for the full credit. For every $1,000 over the income limits below, the credit is reduced by $50.
      • Single, or Separate filers - $75,000 limit
      • Head of Household
      • $112,500 limit
      • Married Filing Jointly, Qualifying Widow(er) - $150,000 limit

    FAQ

    Q. When do the Advanced Child Tax Credit payments start?
    A. Payments start on July 15, and follow on these dates: Aug 13, Sep 15, Oct 15, Nov 15, Dec 15.

    Q. Do I have to file a 2020 tax return to get the Advanced Child Tax Credit?
    A. The IRS will use your 2019 tax return information if your 2020 tax return is not available or has not been processed.

    Q. Do I have to file a 2019 tax return to get the Advanced Child Tax Credit?
    A. If you are not required to file a tax return, and you used the non-filers tool from IRS.GOV, the IRS will use that information for processing your payments. If you have not yet filed your 2019 return, the IRS urges you to file in order to get your advanced payment processed as soon as possible.

    Q. How much is the Advanced Child Tax Credit payment?
    A. The payment can be up to $300 for qualifying children under 6, or up to $250 for those 6-17, per qualifying child, per payment month. Do note that this is the maximum amount you could receive, actual payments will be dependent on your personal information.

    Q. How can I find out if I qualify for the Advanced Child Tax Credit?
    A. The IRS will be releasing a tool allowing users to determine their eligibility and estimated allowable credit. Follow the link below, or subscribe to our newsletter to stay current on IRS announcements and be notified of our guide to using the IRS tools and portal. https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

    Q. If I make too much income, can I still get the Advanced Child Tax Credit?
    A. Eligibility for the credit does depend on your modified adjusted gross income. See above under “What are the limitations?” for further details.

    Q. Can I choose to not receive the Advanced Child Tax Credit?
    A. Yes. You will be able to choose to optout of receiving the advanced payment and taking the entire amount allowable when you file your 2021 tax return. To optout, follow the link to the IRS page on information on portal and tools to come. https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

    Q. How much is the Advanced Child Tax Credit?
    A. The credit is increased to a maximum of $3,600 per child for those under age 6 at the end of 2021, or $3,000 per child for those between 6-17. The advanced portion is limited to 50% of your expected allowable credit as calculated on your 2021 tax return.

    Q. Will the Advanced Child Tax Credit be available next year?
    A. No. The Advanced Child Tax Credit is only set for the 2021 tax year; subscribe to our newsletter to stay current on changes that could affect your tax standing.

    Q. Do I need to amend my 2020 tax return for the Advanced Child Tax Credit?
    A. No, the credit is going to be accounted for on your 2021 tax return. However, the Advanced Child Tax Credit can be determined from your 2020 tax return and if you have information to add that could benefit you, it may be worth doing so. Contact us if you think this is your case and we can determine an answer together.

    Q. What happens if my income (filing status, dependents, bank information) changes? Does it affect my eligibility for the Advanced Child Tax Credit?
    A. Yes. These types of changes can affect the amount of Advanced Child Tax Credit you are eligible for. Update these changes by using the IRS portal. Also see above under "What are the limitations?" for the significance of providing current information to the IRS. https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

    Q. Can I tell the IRS I had a child in (2021/2020) for the Advanced Child Tax Credit?
    A. Yes, to do so use the IRS portal. Sign up for our newsletter to get notice of our guide to utilizing the IRS portal. https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

    Q. Do I have to repay the Advanced Child Tax Credit?
    A. It depends. It is possible that if, on your 2021 tax return, you received more payments than your allowable credit, your tax amount owed will be increased by the excess payment amount.

    More questions?

    Reach out to us; give us a call, send us an email, or come to our office.


    Jose Mata Rodriguez | 06/15/2021