Stephen Merritt, CPA, PC | Certified Public Accountants | (757) 420-5778
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- Child Tax Credit Payouts – What to Expect
- Tips from Louis
Child Tax Credit Payouts – What to Expect
The Child Tax Credit (CTC) is not new, but it was expanded as part of the American Rescue Plan Act of 2021, and you may be wondering what that means and how it will impact your situation. The biggest takeaway is that instead of waiting until filing your 2021 tax return (in 2022) to take advantage of the credit, you can instead opt to receive part of the credit in advance, during 2021.
First, the overall amount of the credit was increased for taxpayers under a certain income level. For those individuals, the CTC is $3,600 for each child 5 and under, and $3,000 for each child between the ages of 6 and 17. This is an increase from $2,000 per child under the existing rules. To receive the full amount of the expanded credit, your Adjusted Gross Income (AGI) must fall within the following limits:
- Single Filer – $75,000 or less
- Head of Household Filer – $112,500 or less
- Joint Filers – $150,000 or less
Beginning on July 15, 2021, IRS will begin sending monthly payments to parents with eligible dependent children. These payments represent an advance on the full CTC, and the rest can be claimed on the 2021 tax return. The full monthly payment will be $300 per child under 6 or $250 per child 6 to 17 years old, and will be paid each month from July to December 2021. Keep in mind that if you are over the above income thresholds but within the existing income thresholds for receiving the CTC, you can still receive up to $2,000 per child, just like in years past.
To automatically receive these payments if eligible, you need to have filed a tax return for 2020 by the extended May 17, 2021 filing deadline, even if you are usually a non-filer. You are eligible for these payments even if you do not have any income to report or taxes due. If you were not able to file by then, you will still get the higher credit amount if eligible, but will need to wait until filing your 2021 tax return to take advantage of it.
If you would prefer to NOT receive the advance payments and instead take advantage of the full CTC when filing your 2021 tax return, you will be able to opt out using an online portal that IRS will be opening on July 1, 2021. There will also be another portal where you can update your information, such as changing the number of dependents you have.
Tips from Louis
Louis wanted to share some tips for summer!
“Don’t forget to wear your sunscreen! I personally also like to wear a hat and some cool shades while out in the sun too.”
“Make sure you and your furry friends are drinking plenty of water while outside in the heat! Stay hydrated!”
“Stay safe and have a fun summer!”
Coronavirus Disease (COVID-19)
Stephen Merritt, CPA, P.C. understands the challenge the impact COVID-19 has on our community.
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